Meet the Manager
Over the last two years, almost every single leader in the Western world has talked about investing in infrastructure. Here, our Senior Fund Analyst, Gordon Smith, talks to 3i Infrastructure’s Chief Financial Officer, James Dawes, about the current climate and which investments he believes will stand the test of time from an income perspective.
Meet the Manager: James Dawes, 3i Infrastructure
Like most sectors, infrastructure is what you make of it. At the top end, there will always be the big Public-Private Partnerships (PPPs) that deal in hospitals and schools. In the middle, Sovereign Wealth Funds and pension funds chase core infrastructure projects, such as port terminals and rail. Beneath this, sits the hunting ground of the infrastructure investment firm. With returns that hit 12%, investments of, say, £100m go much further in this mid-market territory, ensuring investment companies can be more visible (on the board, for example) and less passive.
Containing an infrastructure arm that has a market cap of roughly £2bn, 3i’s impressive portfolio contains 28 assets that include Elenia (the second largest electricity distribution network in Finland) and Oystercatcher (which provides over five million cubic metres of oil and petroleum storage facilities).
The terrain it treads is where industries like mobile phone mast operators (Wireless Infrastructure Group) and airport assets (like TCR) dominate. In other words, the sort of services nobody is going to give up in a hurry. Take WIG as an example; whether more mobile towers are built in new places, more space is leased on existing towers to other companies, or new technologies (like 5G) are rolled out, there is a continuity of income and ability to generate greater returns.
It is becoming clear that the infrastructure market is set to balloon as governments begin to think more holistically about their long-term infrastructure objectives. In the past, infrastructure has been approached sector by sector, whereas in the future, increased connectivity between energy, transportation and technology will become more obvious, and result in greater returns for those who understand this confluence.
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