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The Pipeline Global Online Summit Special: Day 2

Welcome to The Pipeline Global Summit Special, featuring coverage of our flagship event this week for our valued subscribers and attendees. Here's what we learned on Day 2.

Talking points

The limits of control
“The time for [net zero] commitments has passed – it’s very much about getting on now,” Chris Leslie, Macquarie Asset Management’s global head of sustainability told Global Summit attendees.

Well said, too. But as Leslie knows – given Macquarie announced plans in late 2020 to manage its portfolio in line with net zero emissions by 2040, a full 10 years ahead of most net-zero targets – the “getting on” bit is no cakewalk.

“We committed to have business plans in place for our 160 portfolio companies [to achieve] net zero by the end of this year. When you peel back those 160 companies, there’s 150,000 individuals,” Leslie said. That means Macquarie has a lot of educating and convincing to do.

So, how’s it all going? It’s going to be tight, Leslie conceded.

“We’ve encountered pockets of resistance. It’s difficult to be authoritarian when you’re a GP and you don’t have full control [of some of these companies], so we’re wrestling with implementation,” he pointed out.

We’ll find out how well net-zero aligns with minority control, then.

Mind the tech gap
The road to net zero is not just about convincing people, though. It’s also about coming up with innovative private finance structures to accelerate the adoption of climate-friendly new technology, Kroll Bond Rating Agency’s director of project finance and infrastructure, Karim Nassif, told attendees.

Having to wait for government regulation, and then consumers, to determine the successful implementation of new technologies like battery storage and electric vehicles means the private sector can often find itself on the back foot when it comes to the energy transition.

So when new technologies do come around, Nassif suggested the private sector double down on helping stakeholders to best assess the risks involved with technologies that have more complex, uncertain dynamics.

That will be key to kicking the energy transition up a notch. “If we can get there from a financing perspective, there’s a lot that can be done,” he said.

If you (can) build it, they will come
At this point, much ink has been spilled on the US’s much-vaunted bipartisan infrastructure bill. But while the bill survived several well-publicised rounds of inter- and intraparty wrangling, the road ahead is not entirely obstacle free for the US infrastructure market.

“I sit on the board of the FCC [Federal Communications Committee] and spend a lot of time discussing training,” Marc Ganzi, DigitalBridge’s CEO, told attendees. “Specifically, how do we get our economy retooled to focus on some of the themes [of the day]. Right now, [digital infrastructure] is getting absolutely crushed with labour shortages. We need people to build data centres, stack towers, micro trench fibre. The money isn’t the problem; the problem is getting people back to work to build digital infra.”

Unfortunately, those shortages are not just limited to digital infra, warned Miriam Rafiqi, managing director at HIG Capital: “We’re experiencing labour shortages across all sectors. When we look at opportunities, we look for those where there is a funnel of potential labour. It’s very difficult to find qualified labour.”

Charge me up
Earlier this month, when Antin Infrastructure Partners sold UK-based Roadchef to Macquarie Asset Management, we noted the brave new world facing motorway service area owners, as the EV charging infrastructure rollout takes place.

Speaking yesterday on a sustainable transport panel, Antin partner Mauricio Bolana seemed rather content the firm was exiting Roadchef, which it bought in September 2014, at this moment in the energy transition. Why? Because the EV rollout means MSAs will need about 140 charging points, rather than the six to 10 points per station they have at the moment.

“[MSAs] are typically not near urban areas and the cost to bring power in with sufficient capacity can cost a few hundred thousand – if you’re lucky – to several million. That makes [the rollout an] extremely difficult investment as a private party,” he said. What’s more, “the [EV-dedicated] funds being created by governments are absolutely critical but are too slow,” Bolana added.

Sounds like the realisation process for Antin’s 2013-vintage Fund II came around at the right time.

Grapevine

“Olkiluoto [nuclear plant] in Finland has come on, and it’s late. Does anybody wish it hadn’t been built? It’s now Finland’s greatest climate act… it’s hugely decreasing Finland’s dependence on Russia for its energy needs.”

Julia Pyke, Sizewell C Director of Financing, sharpening minds as she pitched for some £15 billion of debt and £3 billion in equity financing for the UK nuclear plant

Essentials

Help us raise money for UNICEF to support the children of Ukraine
As conflict continues to escalate in Ukraine, millions of children and their families are in danger.

PEI Media is raising money in aid of UNICEF, in an initiative launched at the Infrastructure Investor Global Summit in Berlin.

The 7.5 million children in Ukraine is now at risk as the conflict continues to escalate. With explosions in major cities across the country and thousands of families being forced to flee their homes, UNICEF is calling for an immediate ceasefire.

Homes, schools, water supplies and hospitals have been damaged or destroyed. Children have been separated from their families and hundreds of thousands of people have been left without safe water or electricity. Explosives including landmines are also a daily threat to children’s lives.

More than 3 million people have now fled Ukraine, with the number expected to climb to 5 million. UNICEF is working around the clock to keep families safe.

Please donate to help protect children in Ukraine.

Today’s highlights

Here are three sessions you won’t want to miss today:

  • 09:15-10:00 Keynote: A roadmap for the infrastructure asset class Industry veteran Macky Tall, partner & chair of The Carlyle Group’s infrastructure group, discusses his vision for the asset class
  • 11:10-11:50 Has the market accurately assessed valuations post-pandemic? It’s the several-billion-dollar question to be dissected by the Green Investment Group’s Karl Smith, ClearBridge’s Nick Langley, Harbourvest Partners’ Kevin Warn-Schindel, HSBC Asset Management’s Dominik von Steven and Goldman Sachs’ David Walsh.
  • 13:30-14:20 Keynote: Is Liberalism Obsolete? Francis Fukuyama, the legendary political scientist and author, asks whether liberalism is over.

For the full agenda, go to our Global Summit homepage.


Today’s letter was prepared by Bruno AlvesZak BentleyTharshini Ashokan and Adam Smallman also contributed

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