Is Infrastructure PE sweaty?
Is infrastructure PE all sweaty? I'm deciding on what group I want to target for recruitment and heard infrastructure PE was sweaty. Looking for something more chill so any insight would be helpful
Yeah, and the a/c in the office shuts off around 9pm so then I'm extra sweaty when I get to leave at 2am.
It absolutely can be. The "sweatiness" of a job has more to do with the actual team itself than the industry. The sweatiness of finance jobs generally comes from seniors that are not competent managers. With that being said, infra has some more features to it that makes it more likely to be sweaty.
(1) Let's take a look at the modeling. There are three elements to the modeling that can make it much sweatier.
The first is any infra deal that a regulated business and has to file rate cases or has any riders. This is generally just for utilities, but you can also see this in certain power generation deals such as Stonepeak's 50% NCI of Dominion's CVOW. Basically, if you have to file rate cases you need to build two models. You need to build the regulatory model and the actual financial statement model. That's twice the modeling you have to do in the same amount of time.
The second is that taxes generally are much more important and are modelled in a much more granular way. A huge part of the infra space is renewable energy. This involves a lot of tax credits. You are going to have to model how you are going to use them. Most renewable energy projects will have fat NOLs the first couple of years that need to be accounted for and somehow monetized. These are also asset-heavy businesses which means deferred taxes are going to be material. In addition to just the... "project-level" modeling, infra deals tend to have more multiple partners make a bid together. When you have partners, which is just more common in infra than in other spaces, there is a whole nother layer of tax implications because you'll need to track those capital accounts too (unless there is a reason to drop a C Corp's inefficiencies into the structure).
Third, due to the nature of infrastructure businesses, there is a lot of financial engineering that can be done. The more the financial engineering, the more of a pain the modeling is. Also, as alluded to above, basically everything on the tax side can be monetized (tax credits, tax depreciation/NOLs, etc). And most infrastructure businesses are fixed life assets. An offshore wind farm or a solar farm have a fixed life. Sure. In PE you have a holding period of some period of time likely much less than the remaining useful life, so you won't care much about what happens 10 years after you sell the business. BUT, that period of time is going to matter for whoever you sell to, so you are going to need to have some comfort in those out years. You can't just slap on a multiple and call it a day. Well, sure. That is a think that you can physically do, but that won't get you the result you want.
(2) The diligence work itself will often have a lot more to it. Infrastructure projects generally require an ungodly amount of documentation. Think of all the government entities that oversee any part of the construction and operations of infrastructure. All that needs to be checked. All those long-term contracts need to be reviewed. All the financial engineering needs to be validated.
I see, I'm not gonna lie I didn't quite understand half of what you said (incoming Summer analyst looking to decide group placement) but do you think if i want to do IB and exit to a better WLB I should avoid infra?
That's fair. And what I said is really just a long way of saying taxes, financial engineering, and diligence requires more work in infra deals than in most other spaces.
At a high level, infra is more sweaty. If you are looking for an industry that has better WLB, avoiding infra is a good decision.
i did ib to software growth equity and it's p chill and i make good $$
Also interested in infra PE and am coming from a levfin group but have only done infra deals, so I have a great understanding of the debt side of things but maybe not so much equity and M&A other than for the lending cases and was wondering how that would be seen.
Are there any HHs that have a focus in infra funds? Not interested in credit.
there's a blackstone infra assoc opening they've been trying to recruit for for months if you're still looking
Interesting, yeah. Do you know who the HH firm is?
Work in infra PE and it varies. My fund focuses more on transition and higher IRR plays, so less of a core infra focus. This makes the investing much more “PE like” than “infra like” if that makes sense. Can definitely be sweaty, but as the other guy mentioned it it’s much more a function of your team.
The upside of infra though is I generally feel pretty good about my fund not blowing up. Tons of tailwinds in infra right now and it’s looking to be that way for at least the next 10 - 15 years or so. Infra investments have lots of downside protection so the chances of getting a fat 0 on an portco are low. Another thing to think about is, if you can model and go through an infra live deal, everything else will be gravy for you.
Something lesser thought about on here too is that I can feel pretty good about the work I am doing. Infra companies are generally a net positive for society (generally, don’t come at me) and we definitely aren’t Apollo or Cerberus for example - pillaging workforces or doing shady shit in the healthcare industry.
Pros and cons to everything
I really liked this perspective. Thank you! I was wondering if u were planning on being in this space in the long term?
I enjoy the space and think I am in a good seat so I’ll probably stay for a while if I can. PE is going to be a grind in any seat worth it for the long term - whatever you get in WLB you’ll be sacrificing in comp.
Tbh It’s hard to say whether I am actually good at this yet so I might need a few years to see.
Hey I am heading into my first year of IB but am quite interested in Infra PE, would you be opposed to me asking you a few questions?
Have advised a large infra fund in a DD capacity (don't work infra PE, I'm just a consultant).
From sample size n=1, these guys did seem pretty sweaty compared to some of the other PE clients I've seen.
Voluptatem repellendus repudiandae est consequatur aut commodi rem. Saepe quidem quam sunt et a. Eius nulla voluptas at aperiam provident. Impedit ut eveniet soluta rerum fuga.
Rerum rerum et pariatur et suscipit. Rerum unde molestias rerum minus et nulla. Error tenetur culpa voluptas doloribus. Fugiat error ducimus aperiam nihil explicabo. Quia illum maiores alias et eaque qui. Eligendi ipsam commodi recusandae facere.
Id quaerat eos quas nobis. In ut recusandae repellendus illo qui deleniti id error. Dicta ducimus necessitatibus aut corporis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...