Return to search

Time to become more entrepreneurial

Whether driven by technological disruption or diminished returns, the lesson from our Berlin Global Summit is that infrastructure investors need to dial up the entrepreneurialism.

I've said it before and I'll say it again: there's arguably no greater buzz than attending our Berlin Global Summit. With over 1,200 people from all over the world (including 250-plus LPs) attending for two days of networking and brainstorming, this year was no exception.

And the crowd was in a highly buoyant mood. Just check out our videos from the event and you'll see what I mean. 

How could they not be, when the Summit opened with Adebayo Ogunlesi , chairman, managing partner and founder of Global Infrastructure Partners, the embodiment of how successful an infrastructure manager can be, after raising a record $15.8 billion for GIP's third infrastructure fund? After all, the biggest fund in real estate, a much older and more established asset class, is also $15.8 billion in size. 

In fact, the mood was so buoyant at times that some of the participants privately wondered if the industry wasn't feeling a little too pleased with itself. The phrase “echoes of 2006-7” was thrown around, with the crucial acknowledgment that leverage discipline and underwriting standards are holding up much better. 

Still, this self-awareness is a good thing, because this is no time to be complacent. From our opening panel on the future of infrastructure, which touched on project sustainability and the importance of strong outreach to procurement authorities and communities, to Zipcar co-founder Robin Chase's opening day keynote on the impact of driverless cars, the message coming through was heard loud and clear: infrastructure investors need to become more entrepreneurial and fleet-footed. 

Technological disruption offers an obvious case in point. If you're a car parks investor banking on a smooth ride over your 20-year concession, think again. As Chase pointed out, a fully driverless world is going to leave little reason for driverless cars to park in city centres: “When you take the [taxi] driver out of the vehicle, the cost of running that vehicle goes down to $2 per hour. There's no need to park – it's cheaper to keep the car moving around the city.” 

But the need for more entrepreneurialism was also evident in the debates about core infrastructure and the rise of so-called hybrid assets. As one prominent LP put it to me on the sidelines of the event, the infrastructure industry has had it good over the last few years, benefitting from low interest rates to attract record amounts of capital. The flipside to that is that a lot of that capital ended up chasing brownfield core infrastructure, which is now dangerously priced in several markets. 

Even if you think those fully priced investments will not be tripped up by a rate rise, there's still a supply issue in that there simply aren't enough brownfield core assets to satisfy demand. This is where creativity comes in. Chief executive Vincent Levita argued convincingly on day two about the infrastructure characteristics of InfraVia's recent data centre investment, and how he saw it as his job, as a manager, to 'find' these new assets. 

Star Capital chairman Tony Mallin, on the same panel, commenting on the demise of PPPs across Europe, explained how his firm is currently working with a city government for the potential procurement of several PPP-like assets, where the revenue stream is not the fixed availability payment of yesteryear, but rather linked to the rise in economic activity those new assets are expected to generate.

Whether this increased entrepreneurialism means infrastructure will become more PE-like is almost immaterial. For too long, there was a view that infrastructure assets could just be bought and then forgotten about, such was their 'steady' nature. It's time to consign that view to where it belongs: the dustbin of history.

Write to the author at