Infrastructure Players
Can anyone shed light on the key infra players/differences among them? I'm aware of the SWFs, more interested in the megafund infra arms and the independent players (Stonepeak, Encap, etc.) Would appreciate any information.
Cheers.
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Macquarie Infrastructure and Real Assets
This! They've been pretty much the top Infra players for years now.
thought my comment saved but I guess not. Brookfield, Carlyle, and KKR all have teams in this area, though Carlyle’s might be a bit smaller I believe.
Just check the list of the top funds: https://www.infrastructureinvestor.com/infrastructure-investor-50/
GIP
I would generally break the industry into the following (and can be broken down even further between these as well).
Infra PE focused players -- the likes of GIP, EIG, Stonepeak, etc. This is quite broad and can be divided into broader infra and those that focus on energy infra, or pipelines etc. If you want to be in the sector I would recommend these as the best place to be at. Tend to be extremely technical in their analysis, lean teams but a lot of passion for the industry and generally extremely smart people. Each of them has their own intricacies, but lifestyle / hours in line with other PE funds (maybe marginally better).
Infra Teams within MF / Banks -- here is your Carlyle, KKR, Bx, MSIP, GS (I believe they still have) and even SLP and TPG do some work in the space (I believe SLP is shutting its energy / infra related strategy, which fell under Kraftwerk). Worse hours than above. I would generally advise if you are joining a MF try to join for its main strategy and not one of the add-on strategies. They aren't bad places to be, but the focus of the firm is generally around their core strategies.
SWF / Canadians / Pensions - large asset managers that are active in the space. ADIA, QIA, CPPIB along with some of the larger pension funds like Calpers are active here. Brookfield technically falls in the 2nd bucket, but they seem to operate more like these. Generally bid to slightly lower return target. This is a broad category, but the similarity in all of them is that they tend to be quite hierarchical / lot of red tape involved, salaries / bonus lower and generally better hours. In the case of the SWFs the upward mobility is restricted if you aren't a local, so there is a kind of ceiling on how high up you can go. The Canadian shops and pensions are much more lifestyle friendly, good places to be from a long term perspective.
Let me know if you have specific questions on any of these or the sector on the whole, as the topic was pretty broad. If it wasn't clear, for someone looking to move into an Infra investing role, I would recommend these buckets in the order I placed them (i.e. Infra PE fund, Infra team within larger MF / group, SWF / pension fund).
Great answer. Just curious, why would you advise MF/Bank over the 3rd bucket in general? It may be a bit slower to get things done depending on the hierarchy, but I can see how some people would value the lifestyle more than the second bucket.
For OP and others reading this, here's some good threads where this industry has been discussed in more depth:
Yes, you hit the nail on the head, I think they all have pros and cons, which are different depending on where you are in your career. For someone at a Director and above level, moving to a SWF / Pension fund role might be great (pretty good pay, good lifestyle, etc). For someone fresh out of banking I think the former 2 would be a better learning experience, better MBA placements (if you're looking to go into that), and better comp.
This is a broad statement and probably doesn't entirely hold true, but a lot of the names I put in the 3rd bucket have historically done a lot of co-investment and not 'led' as many of their deals. Again, this isn't entirely true and is more the case in different geographies as well, but in general I would expect the complexity of diligence / modeling to be lower as compared to the others.
Super informative, SB'd.
Can you go into a little more detail on bucket 1? Do those types of funds specifically look for industry expertise in junior hires or is it the usual mix of guys from P&U groups, M&A, lev fin, etc? And is the career trajectory similar to corp PE (e.g. stay with the fund, switch funds, go the hedge fund route, etc)?
Edit: also, I feel like you hear a ton about stonepeak even though they trail some of the other prominent infra PE players in AUM. Any reason why they apparently garner such respect?
Appreciate it.
Those funds do tend to hire from the groups you mentioned along with energy / natural resources (a lot of them will have a Houston office as well). These are slightly specialized sectors, so having someone with a bit of sector expertise is always helpful, and the models are often quite different, as most of these funds spend more time bidding on individual generation assets and not entire companies. That being said, the expectation in terms of sector knowledge at the pre-MBA / associate level isn't very high at most places.
It is a bit of self selection as well. At the mid / lower ranked P/U and Natural Resources groups, it can be difficult to get looks from traditional PE, so a lot of these guys end up recruiting for infra (in this sense to some extent it is a sector that pigeon holes you). You don't really have a lot of healthcare / TMT bankers who want to move to infra funds, so you don't see many of them in those recruiting processes. If they showed interest in the sector and chose to recruit for these roles, I don't imagine it would be all too difficult for them to break in post IB (or at the very least get interviews).
Couldn't tell you why Stonepeak gets talked about more than others. They do manage a good sized fund and are quite active in the space / quality of people is quite high as well.
Very informative and great thread overall. Any advice or thoughts on lateraling into infrastructure from real estate private equity or moving into the space post-MBA? Very keen on infrastructure, particularly in emerging markets, and have been researching and networking to understand the most advantageous path to get into infra PE. Doesn't seem all that easy or straightforward, however.
Feel free to PM me on this. Infra is one of the sectors I cover, specifically in EM.
The II50 is probably the best way to answer your question:
https://infogram.com/1pyykr16jy2z0lh3mngxzrz956iy7yvnvr9?live
The Top 50 Infra Funds ranked by total capital raised over the last five years.
Related note: What's the outlook on the sector over next 5-10 years? There's another thread on O&G PE being dead but infra seems to be doing quite well.
Happen to have a link to the O&G thread you mentioned? Can't seem to find it. Thanks!
I Squared Capital.
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