Toni Silva, Ilias Georgopoulos (Credit Suisse): The Inroad of Infrastructure
“The infrastructure asset class is a matter of people, technology, and data working closely together,” say Toni Silva, CEO of Credit Suisse Fund Services, and Ilias Georgopoulos, CEO of MultiConcept Fund Management, the third-party management company of Credit Suisse. Interview.
How are you approaching the infrastructure asset class?
Traditionally, our company offered this asset class for inhouse funds but we are now rolling out our infrastructure one-stop-shop into the third-party management business. The geopolitical and economic environment has created the conditions for infrastructure to become a booming asset class in the coming years, both on the equity and the debt side. The strong appetite for ESG investments is reinforcing this trend. Investing in new sustainable water and communication infrastructures, hospitals and health care infrastructures helps to generate strong “E” and “S” results, while the “G” consideration is getting more and more important. For all these reasons, we believe that infrastructure will persist as a prominent asset class in the alternative funds space for the next ten years.
“We believe that infrastructure will persist as a prominent asset class in the alternative funds space for the next ten years.”
How are you adapting to this asset class?
Infrastructure being a non-listed asset class, the traditional technologies used to value large portfolios cannot be leveraged. There is no master database, organized stock exchange or automated operational framework. On the other hand, there are similarities with the real estate asset class where we enjoy a deep expertise. We are also investing to align people and technology with our one-stop-shop approach as we need our experts to reach a sufficient knowledge of each investment to identify risks. Evaluating an airport, a marina or a pipeline requires very specific skills. We have several committees where risk, compliance and portfolio managers talk about each project for RE/PE assets classes and intend to implement the same governance control for infrastructure assets. On the technology side, we are following our technology investment roadmap planned until 2025. One of its key aspects is to enhance our PE/RE platform for both the operating and reporting sides. For example, we are upgrading our portal to provide direct data access to third-party Mancos. We are also working with specialized companies who provide sectorial data and a world overview of each specific type of investment. This is a matter of people, technology and data working closely together.
Where do you see infrastructure funds in five or ten years?
It is generally estimated that over EUR 1 trillion will be invested across OECD during the next few years in the energy, transport and communication areas, without counting the reconstruction of Ukraine. A growing number of projects will materialize through Luxembourg investment funds. This will also confirm the current evolution in the financing model with a shift from States and banks to investment funds. Ultra-high net worth individuals and pension funds already have a great appetite for such investments, and we expect that the barriers to entry will get lower, allowing other types of investors to access this asset class. This is comparable to the recent evolution of private equity where individuals can today invest smaller tickets. The big difference to private equity is, however, that infrastructure investors aim for steady performance, with annuity income rather than maximizing profits in one go. We also feel that the infrastructure asset class provides a great tool to diversify a private asset portfolio.