Where value creation gets its reward

Welcome to Infrastructure Investor’s Operational Excellence Awards, which we are holding for the first time this year.

We announced these inaugural awards at the end of April, inviting fund managers and other investors to submit examples of investments they had made that resulted in true value creation.

Another good reason to seek out examples of operational excellence within the asset class is the realisation that many investors have come to – that infrastructure assets do not simply require capital in order to make good investments. Particularly in a low-interest rate environment and in a space that has become crowded and seriously competitive, investors we’ve spoken to increasingly seek out assets or businesses where there is room for operational improvement.

Whether speaking at conferences or in the course of granting interviews, fund managers have repeatedly stressed the following point: “Infrastructure is not something you invest in and forget about.” That may have been the case when few people even recognised it as an asset class in its own right and core infrastructure assets were readily available, but as the asset class slowly comes of age and investors recognise its appeal, increased competition has led to high valuations.

While some investors have decided to back away from infrastructure others have sought and continue to seek ways to achieve desired returns. Over a period of a little over a month, general partners (GPs) had the opportunity to send us their strongest case studies, provided they had fully or partially realised the investment on or after June 1, 2014. The competition was open to deals and projects across geographies and infrastructure sub-sectors.

Our panel of five judges gave generously of their time and expertise in helping to evaluate the entries and to arrive at a winner and three highly-commended finalists.

Some of the key metrics that served as broad guidelines in judging the submissions included top-line revenue growth, EBITDA growth, market share and expansion of product range. However, the most important criteria were qualitative rather than quantitative, including supply chain improvements, management changes where necessary, ESG/CSR initiatives and an overall provision of greater benefit to end-users and the community within which an asset resided.

First, we’d like to introduce you to our judges to whom we are grateful. We then invite you to take a look at the initiatives some of the leading infrastructure fund managers in the world implemented to add value to their initial investments, not only achieving impressive returns for their clients but achieving operational excellence in their portfolio companies.

While the selected winner and highly-commended case studies vary in geography, size and type, there are some characteristics common to all of them: creative management, active engagement with the portfolio company’s management team and innovation in terms of finding opportunities for growth.

Interestingly enough, our judges thanked us for the opportunity to review the submissions which they described as “extremely interesting” and featuring “a very strong list of projects,” adding that they found the experience educational. We hope you will agree.

OUR PANEL OF JUDGES

MICHAEL BARZ is a partner at law firm Dentons, whose practice focuses on domestic and international financings. During his long-standing career, he has represented clients in the financing of professional sports stadiums, power plants, petrochemical facilities, toll roads and aircraft acquisitions and has negotiated and closed infrastructure financing and development transactions for clients around the world, particularly in Indonesia, Saudi Arabia, India and the Czech Republic.

MICHELLE KARAVIAS is global head of infrastructure at research firm Business Monitor International (BMI), whose areas of expertise include global infrastructure, with specific focus on the Americas, the Middle East and Africa. In particular she has expertise in electricity generation, public-private partnerships in the transport sector, project finance and company and equity analysis. She was also instrumental in helping establish BMI’s Americas research team.

RICHARD LITTLE is an infrastructure policy consultant and a visiting scholar at Rensselaer Polytechnic Institute, his alma mater, who has 40 years of experience in planning, management, and policy development relating to infrastructure and public facilities. Most recently, he was senior fellow, infrastructure at the Price School of Public Policy at the University of Southern California (USC) and director of USC’s Keston Institute for Public Finance and Infrastructure Policy.

MICHAEL MATHEOU is a partner in law firm Hogan Lovells’ Infrastructure, Energy, Resources and Projects practice. He has more than 30 years’ experience with infrastructure projects, including public-private partnership projects across multiple sectors including transportation, defense, education, healthcare, and government buildings and accommodation, acting for private sector bidders and financiers and for governmental and other procuring authorities. He has advised on key P3 projects in the UK, Greece, US and Canada.

DAVID NAREFSKY, a partner at law firm Mayer Brown, has had an active role in high-profile P3s, with particular responsibility for governmental and regulatory issues. His practice at the firm, which he joined in 1989, has included the representation of Chicago-area governments in the financing of convention centre and sport stadium facilities, mass transportation projects and representation in public finance offerings. He has also extensive experience in the US aviation sector.