First look
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In a perfect world, we would’ve all congregated – in person and definitely not in a socially distanced fashion – at the Berlin Hilton in March for our flagship Global Summit, infrastructure’s premier jamboree. Alas, we live in a different world now, but that won’t stop us from connecting on 12-15 October with our Global Summit Online.
In fact, we’re bringing you our most extensive investor audience yet. There will be the ability to schedule 1:1 meetings, all the content from the event will be available on-demand and, of course, you’ll have the opportunity to take part in live Q&As with leading industry figures as we debate the asset class’s latest trends.
As always, we have a world-class line-up of keynote speakers, including former BP chief executive Lord John Browne, author of Invisible Women Caroline Criado Perez OBE and futurist Ben Hammersley, among others.
You really don’t want to miss it, so click here to sign up if you haven’t already, and see you on 12-15 October!
Macquarie nears close for second global fund
Macquarie Infrastructure and Real Assets‘ extensive regional funds strategy is one of the Australian manager’s hallmarks, which is what makes its Global Solution funds so interesting. Effectively functioning as umbrella funds, the vehicles allocate to other MIRA funds or co-invest alongside them, giving the firm’s LPs global exposure via its network of regional vehicles.
With just under $900 million raised for MIRA Infrastructure Global Solution II, according to a filing with the US Securities and Exchange Commission, the latest vehicle in the series is nearing its $1 billion final close target. Resolutely international in focus, the fund will be exposed to around 30 countries in total. “This is a play for asset and sector diversification,” a source familiar with the vehicle added.
Targeted returns for MIRA Infrastructure Global Solution II are set for 8 percent, according to pension documents. A final close is expected this year or in early 2021. Its predecessor fund closed on $1.04 billion in April 2018.
Covenants cleared for take-off at Gatwick
The struggles of airports in 2020 was laid bare last week when London Gatwick Airport, owned by VINCI Airports and Global Infrastructure Partners, revealed it had agreed with lenders to temporarily waive its financial covenants. VINCI said the agreement reflected “the exceptional circumstances affecting air travel”.
The move garnered the support of about 85 percent of Gatwick’s lenders and bondholders. Gatwick had asked for the waiver on 28 August, the day it posted a £321 million ($405.3 million; €348 million) loss for H1 amid a 66 percent fall in traffic.
At this point, it’s worth recalling a conversation The Pipeline had in June with a banker who posited that although lenders were expected to get their money back across most airports, things might not work out that way for equity holders.
‘Business as usual’ for LPs
Although most institutional investors took a ‘wait-and-see’ approach when it became apparent just how disruptive covid-19 was going to be, Campbell Lutyens has more recently “seen a steady decline in the number of LPs putting their commitments on hold”.
Of the roughly 600 LPs the placement agent interviewed in the past six months, 22 percent had put commitments on hold in April, but only 4 percent were still doing so in July and August. In addition, Campbell Lutyens found that while a large proportion of LPs had difficulties in committing to new GPs at the outset of the crisis, 39 percent were “aggressively looking to make new commitments”.
Digital infrastructure strategies are unsurprisingly in favour, alongside private debt, distressed opportunities, healthcare, secondaries and the energy transition.
‘Business as usual’ then, with an asterisk.
Essentials
Deadline extension: Perspectives 2021
In its ninth year, Perspectives is Infrastructure Investor’s annual study of how institutional investors will approach the asset class over the coming year. If you are an institutional investor, your participation in the study is greatly appreciated.
CLICK HERE TO PARTICIPATE
Deadline to participate: 3 October
Participating takes less than 10 minutes (we promise!) and in return you will be provided with a complimentary copy of the full results of the study. A $5 donation to UNICEF will be made for every completed set of responses, with your answers remaining strictly anonymous. For any questions, please email Nicole Douglas, head of investor research: nicole.d@peimedia.com.
Grapevine
“China will scale up its Intended Nationally Determined Contributions by adopting more vigorous policies and measures. We call on all countries to pursue innovative, coordinated, green and open development for all”
China’s President Xi Jinping assumes a leadership position as he commits the world’s leading polluter to carbon neutrality by 2060
Who’s hiring
Dalmore dials up utilities expertise
Andrew Marsden, most recently managing director in CDPQ’s infrastructure investment team, has joined Dalmore Capital in a similar role, the London-based GP said. According to a statement by Dalmore, Marsden, who has more than 30 years’ experience in infrastructure investment, has “particular expertise” in utilities and energy assets. He has spent roughly half his career at GE Capital, most recently heading its European energy and utilities investment group, and led origination for EMEA and Latin America from 2015 to 2017. Dalmore said that in his new role he would “focus on originating, executing and managing low-risk, regulated investments”.
His skills should come in handy fairly soon. According to a source, Dalmore is eyeing a bid for Western Power Distribution, a UK utility put on the block by Pennsylvania-based PPL. Dalmore has declined to comment on a potential offer.
LP watch
Sunsuper looks to the skies
Out of crisis comes opportunity, or so we’re told, and that’s ringing true for Australian superannuation fund Sunsuper.
Ian Patrick, the fund’s chief investment officer, told Investment Magazine that the downturn’s effect on the discount rates of harder-hit assets could make them attractive targets.
“Whilst those assets have appeared to be sub-par in terms of defensiveness through this period because of a hard stop on economic activity, if you look forward and we learn to live with and manage covid-19 – and eventually perhaps have a vaccine – those assets look pretty attractive given where they are valued today, particularly in relation to alternative defensive assets,” he said.
He argued that vehicles like Sunsuper can take a longer-term view on such assets, unlike GPs operating to specific fund terms.
Sunsuper has exposure to Brisbane Airport in Australia and Bristol and Birmingham Airports in the UK. It is also in merger talks with fellow Queensland-based fund QSuper, an investor in London’s Heathrow Airport.
Deals
OMERS, OTPP switch off smart meters after three years
The Ontario Municipal Employees Retirement System, the Ontario Teachers’ Pension Plan and utility SSE have sold their interests in UK smart meter group MapleCo to Equitix, three years after setting up the business.
MapleCo was formed with the intention of installing at least 2.7 million smart meters across the UK, as part of the government’s then target of having the devices installed in every home and business by 2020.
MapleCo has to date installed 1.6 million meters, while the UK government’s target was pushed back to 2024. Figures from the end of June showed 21.5 million smart meters operating in the UK, while covid-19 lockdowns meant just 135,000 devices were installed in Q2, compared with 980,000 in Q1.
Disposals are not that common for the pension duo and neither commented on the reasons behind the sale. Perhaps Equitix, investing through 25-year funds, may find its model more akin to the progress of the installations.
Today’s letter was prepared by Zak Bentley. Bruno Alves, Kalliope Gourntis, Jordan Stutts and Daniel Kemp also contributed.
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