‘You uncaring shark’

How would our readers within the infrastructure fund community like to be seen? Probably not as “sharks” who “made a killing” and “destroyed” a firm “caring for 31,000 old people”. If you didn’t know already, the descriptions in the previous sentence were applied to US alternative assets investor The Blackstone Group by London newspaper the Daily Mail due to its alleged role in creating the conditions for the eventual sorry plight of UK care home operator Southern Cross.

Fortunately, the British Venture Capital Association issued a swift and carefully targeted riposte to the media coverage of Southern Cross, challenging the view that the firm’s troubles should be attributed to Blackstone and highlighting the good work done by other investors in the sector. Perhaps as a result, subsequent media reports did appear to dwell a little more on the counter-arguments.

In a similar fight, how would the infrastructure asset class fare? Does the lack of an industry association mean it may as well throw in the towel? At the 2010 version of our annual Berlin forum, there was talk behind the scenes of such an association being formed, but nothing has since materialised. While there are national – and even one or two supra-national – bodies in the PPP/project finance field, there is no organisation encompassing the interests of all providers of private capital for infrastructure.  

This is worrying, since ownership of infrastructure assets is potentially highly sensitive. Care homes are the exception rather than the rule in private equity – rarely does private equity ownership have such a powerful social impact. But, through their management (whether full or partial) of ports, airports, bridges and the like, infrastructure funds have responsibility for ensuring safe passage of countless multitudes of passengers every day.

But as yet, infrastructure funds have not – thank heaven – had to deal with the repercussions of a major airport security failure, a collapsing bridge or an exploding gas pipeline. In such an event, it’s not hard to imagine newspaper journalists digging furiously to find the slightest evidence of culpability on the part of the owner.

If this imagined scenario becomes reality, let’s hope the infrastructure asset class is by then
sufficiently organised to offer a coherent response.