Putter: airports are not infrastructure

In a keynote interview with Infrastructure Investor, Thomas Putter – the former head of Allianz’s alternative assets business – warned investors to think carefully about the risk/return profiles of assets that may be misleadingly labelled ‘infrastructure’.

In a wide-ranging keynote interview in the December/January issue of Infrastructure Investor (click here), former Allianz Capital Partners chief executive Thomas Putter said that certain assets that are referred to as “infrastructure” do not really belong in the infrastructure asset class.

For example: “To me, an airport is not an infrastructure asset. The skills to make an airport successful are operational skills – retail, marketing, resource allocation, operational efficiency and cost management.”

Putter implied that fund managers may seek to blur the lines between private equity and infrastructure as a way of preparing their investors for lower returns in a tougher economic climate. He said the skills referred to above “are commonly used in the buyout world. The thing is, if you’re taking buyout risk, should you not be achieving a buyout return? That will be tough in this environment. So what better than to call an airport ‘infrastructure’ as a way of managing return expectations?”

He challenges investors to explore whether the skills of fund managers really match up to the demands of the assets in their custodianship. Referring to his time as a board member of German motorway services chain Tank und Rast, he said that “not a single measure” taken to create value in the business was a measure infrastructure investors would normally take – and yet the asset has been both described and traded as an infrastructure asset.

“I want institutions to think carefully about the appropriate risk/return for things that are called infrastructure,” urged Putter. “I’m concerned that, amid the frenzy surrounding the new fad of infrastructure, people have lost sight of certain risk/return fundamentals. They need to be analysed properly.”

Putter, who was instrumental in the launch of renewable energy investment unit Allianz Specialised Investments in 2006, is currently planning to involve himself in a fund management business in the renewable energy space. He left Allianz in 2009 and has since taken up various advisory roles with the likes of Greentech Capital Advisors and Swiss Re.