Q&A: 1st year FoF Infrastructure at Buyside


  • Private Equity Infrastructure Funds, Secondaries and Co-investments
  • Experience in Institutional Asset Management & Investment Research (Mutual funds)
  • CFA Completed | European Financial Advisor Charterholder
  • Excel financial modelling (VBA)
  • Telecom & Financial Services
  • Managerial experience & Strong project management | Trained off-shore teams

Happy to answer technical questions re:

  1. PE Infra and Buyouts (will do my best)
  2. CFA (stategies and market value)
  3. Managing people offshore & Project Management
  4. Financial Modelling

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Comments (31)

May 15, 2019 - 6:33pm

After reading plenty of market trends research for both PE and Infra, I did learn that one of the biggest drivers of Infra investing was the capital need by the Governments to finance Public Infra. Why? Because governments are facing a huge financing gap between what they have available (public budget) and what they really need to build the infra assets, hence the partnerships with Private Funds.

The main cities in the world are becoming bigger and bigger (you can find research online forecasting that most of the world population will live concetrated in capital cities). As the cities get bigger and bigger with more population, the infra needs will also increase.

Also, I felt attracted to subsectors like Telecom, Social Infra, both critical for the correct development of big mega cities.

There is also research suggesting that some types of Infra (the most risky but with better IRR, aka "opportunistic") and some types of traditional PE are competing for the same assets.

-- Alpha Seeker --
  • 2
May 15, 2019 - 5:27pm

If you don't mind, what's comp like on the allocator side? And hours/lifestyle? Thanks

Offshore liffe
  • 2
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May 15, 2019 - 6:35pm

I would say it is similar to traditional, with slightly better working hours.
However, during live deals expect same deadlines and long hours as traditional PE.

I would suggest choosing Infra if you have knowledge or passion for the types of assets you would ultimately invest.

-- Alpha Seeker --
May 17, 2019 - 7:14am

Hi Cornelius, although I am not an expert in Canadian Pension Funds, I have asked some of my contacts and they mentioned OMERS and Canadian Investment Board as some of the best along with Brookfield.
PSP was mentioned as well as a good place to work and progress.

Hope it helps,

-- Alpha Seeker --
May 17, 2019 - 7:17am

There are 3 main IRRs we target (roughly)

Core / Core + 8-10%
Value Added 10-15%
Opportunistic 15% and above

Note that Opportunistic IRR and some traditional PE are targeting the same assets, which in turn is rising the valuations in those assets (overpriced now) and decreasing IRRs. (One of the biggest factors determining the IRR and MOIC is the entry price).

-- Alpha Seeker --
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Jun 30, 2019 - 1:34pm

Hi - can you please provide some more color on how groups are achieving these IRR targets with such high multiples. Is it internal leverage to boost IRRs and still show robust cash-on-cash yield?

May 17, 2019 - 7:20am

I started using VBA in my sell side job when I needed to use 3 interconnected models to produce a top down revenues telecom forecast ( first the country, then market share and finally the technology split for each market)

VBA helped to get User inputs in the right place through simple windows asking inputs (as an example) but mainly helped to manipulate, transform and move data from one place in one format to another.

Currently, you will read that Python is taking over and bla bla -While it is true that Python can be more powerful than VBA, it is still not integrated within Excel, so you need to code it outside excel and then adjust the system to produce the desired outcome in excel. Very complicated. It is likely Microsoft will implement Python within Excel, but not yet.

The way i learn myself VBA was the following:

Initially, I followed an online VBA training to understand the commands, syntax (at the end of the day is just another language) and execute simple examples.

It really helps to execute the code line by line (F8) so you can instantly see the effect of the code in the excel spreadsheet.

Also, if you want to automate a task in excel, try the recording the steps while you perform them manually. Once you have finished, open the code and revise the syntax step by step.
That is one of the best ways to learn it.
Since VBA has a massive amount of syntax and combinations, the key is try to solve any problems or tedious tasks in excel using VBA.

Hope it helps,

-- Alpha Seeker --
  • 2
May 17, 2019 - 8:15am

PPP are a mess when you have to deal with govt entities which slow the process down and shocker... are political. Biggest threat to these projects is the ramp up/construction and the ability to produce revenue. That's why there's brownfield only funds with projects that have demonstrated revenue and likely have some long term lease . My answers as US influenced only, I know the model works better outside of here.

May 20, 2019 - 7:34am

PPP involves many legal considerations and would require a more detailed and intensive modelling (providing you fully understood all the conditions). In other side, you have a state partner and probably easier to forecast CFs.

From my experience, my partners and senior VP normally prefer Brownfield here in Europe but from time to time there are unique opportunities in PPP.

The common denominator for the three is a very detailed and flexible model.

Hope it helps,

-- Alpha Seeker --
May 17, 2019 - 10:42pm

What are your thoughts on the CFA?

What motivated you to obtain the CFA?

Has it helped you in terms of networking or obtaining job interviews?

Any tips as I study for Level 2 with less than month to go?

May 20, 2019 - 7:43am

CFA was probably one of the best decisions I have made. I wish I have started studying earlier in my life. I do remember when I was just registering for level 1 (not even studying) that most buy side companies showed great deal of respect for your commitment. Sell side companies also financed it to support your training (also because it provides a sense of trust when clients see it on your research).

Once I became CFA Charterholder, recruiters were more open and keen to forward the CV. You can also join the CFA Society in your country - I could meet people from almost every single Fund Manager.

Before registering for CFA, I looked like +100 job descriptions in London for Investment Analyst positions (Equity Research, Pension Funds, Portfolio Management, Hedge Funds and even Private Equity) and discovered that it was very common.
I decided to take a look at the real books and really like most of the content - especially Accounting, Valuation, CF and Equity, which is nearly 60% of the syllabous for L1 and L2. I liked the practical approach and how it was explained.

You need to like the content and make sure it fits the job and industry you are in.
For the buyside it defo matters (Hedge Funds are asking almost everyone to do it, even people with M&A Exp in bulge bracket banks, and PE or Pension Funds are demanding it).

For your L2 prep with 1 month to go:
+ Focus on exams paper - do 1 half exam per day and revise it in the same day.
+ Revise only => Ethics + FRA + Equity + Fixed Income + Portfolio Management.

Also, I do recommend sitting a live mock - here in UK the CFA UK society organizes it.

Best of luck.

-- Alpha Seeker --
  • 3
May 17, 2019 - 11:10pm

I assume common entry points for Infra PE would be from IB groups that specialize in Infra; however, does Infra PE value Big 4 Experience? Would EY's Infrastructure Advisory or PWC's Project Finance group be considered strong experience?

From my understanding, they are more focused on the accounting side (quality of earnings & etc.), but wanted to hear what you think?

There is more than one way to get there. I'd rather have 30 chapters than 3000 pages.

May 20, 2019 - 7:50am

Yes, you are right.
However, there are more entry points.
Big 4 like KMPG has a very reputable franchise within Infra - some Infra funds recruit directly from Big 4 and even Infra Advisory IB get recruits from Big 4 or FoF.
PwC and EY experience you mentioned is appreciated and welcome as the modelling, legal and direct related PE experience is transferable. Just will warn try not to stay there too long - better to jump to a very small infra boutique if possible to keep growing.

Just highlight your quant skills and list deals/transactions you were directly involved (provide numbers) when dealing with recruiters a

As you mention, big 4 are more focused on the accounting side given their nature of their businesses - but that it is a selling point you can use for Infra Boutique Banks (eg. Rubicon Infrastructure Partners)

Hope it helps,

-- Alpha Seeker --
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May 19, 2019 - 8:00am

Regarding FoF
I recently spoke with an institutional investor re. a junior PE FoF role. They told me that:
1) I'd get only FOF experience (no co/dir-investments)
2) I should expect repetitive number-crunching tasks for the first few years (assessing funds)
3) No PE interaction as relationships are managed by senior ppl

While I appreciate their transparency, this makes you wonder whether it'd be a bad decision to branch into FoF early in one's career. What's your opinion? Thanks!

Sounds like the biggest mistake you can make. Avoid FoF like the plague.

Most Helpful
May 20, 2019 - 7:58am

There are many possible options re FoF.
1. Some small FoF just invest in primaries, which can be good during 1-2 years to get your feet in PE and understand the industry. If you improve your modelling, you will have chances in small and middle market funds within Infra space.

  1. When you start, tasks can be repetitive, it is up to you and the deal flow to gain access to more enjoyable and harder tasks. Of course, if your partners are not great deal makers or have difficulties sourcing deals, you may end doing nothing. So check in advance what's the deal flow and the size of the FoF.

  2. No PE interaction at all is something weird, as even junior analyst where I worked attended the onside DD and deal with PE executives and CEOs during ref calls.

Maybe that institutional investor in particular is not the best option for LT but it could serve you as a step for a better FoF.

I would review the FoF in particular to understand the split btw Primaries (investing directly in Funds), Secondaries ( acquiring stakes) and co-investment.

Would recommend a FoF with a decent split of Primaries, Secondaries and Co-Investments, for your early days.

FoF have a series of pros and cons vs Direct PE investing, not the same type of jobs and the clients invest in a FoF for other reasons.
Work life balance tends to be better at FoF although during co-inv is like Direct PE investing.

Hope it helps,

-- Alpha Seeker --
  • 4
May 29, 2019 - 8:50am

Can you comment on how corporate credit ratings are used in equity research? Is research done into the creditworthiness of small-cap and mid-cap companies? Would there be value in a tool that did that automatically without a CFA?

May 29, 2019 - 10:02am

Hi, thanks for doing this.

Curious to know how you guys justify Core + or even infra-like assets to your IC or approve-rs ?
Say for example social infra like healthcare or education, you start moving completely away from contracted revenue /OPEX into more operational PE-land.

Jun 14, 2019 - 5:09am

You are right in the sense that with Social Infra we are moving towards PE territory. In fact, PE funds are lowering their return expectations and targeting 15-20% returns, which creates competition vs Infra funds. This increases entry multiples and reduces IRR.
The good aspect is that there are more options to shape / improve the social infra assets, making the deal and asset management more interesting.

I personally believe social infra (as we understand in Europe) has room for growth, in the same way big cities are becoming even bigger, and they will require more infra like that - however, governments are unlikely to have more funding - this is where Private Capital enters.

-- Alpha Seeker --
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