In a recent fireside chat hosted by Giovanni Amodeo, Don Dimitrievich, Portfolio Manager and Senior Managing Director at Nuveen, shared his insights on the evolving landscape of infrastructure credit, particularly within the energy sector. Here are the key topics discussed:
Background and Role at Nuveen: Don Dimitrievich began by outlining his professional journey from a chemical engineer and corporate attorney to his current role at Nuveen. He highlighted Nuveen’s extensive asset management capabilities, managing over $1.2 trillion across various asset classes, with a specific focus on infrastructure credit and the energy transition.
Trends in Infrastructure Credit: Dimitrievich discussed the cyclical nature of infrastructure investment, noting that despite its defensive reputation, the sector experiences significant cycles. He emphasized the importance of Nuveen’s broad expertise and substantial capital in navigating these cycles.
The Energy Transition and Power Demand: A major theme was the historic opportunity in the power sector driven by decarbonization, electrification, and the rise of artificial intelligence. Dimitrievich pointed out the anticipated increase in power demand and the substantial capital required to meet this demand, making it a lucrative area for investors.
Investment Strategy and Risk Management: Dimitrievich explained Nuveen’s approach to investing in proven technologies with significant operating histories to mitigate early-stage technology risks. He stressed the importance of cash flow stability and avoiding over-reliance on government subsidies or regulatory frameworks that could change.
Regulatory and Market Considerations: The conversation touched on the importance of understanding regulatory environments and avoiding binary regulatory risks. Dimitrievich shared insights on how Nuveen navigates these challenges by focusing on projects with clear regulatory frameworks and avoiding over-dependence on subsidies.
The Role of Energy Storage: Energy storage was highlighted as a critical component of the energy transition, necessary for balancing supply and demand. Dimitrievich discussed the regulatory and market factors that make energy storage an attractive investment.
Supply Chain and Permitting Challenges: Dimitrievich acknowledged the ongoing supply chain issues and the lengthy permitting processes that can delay projects. He emphasized the need for thorough due diligence and conservative project timelines to account for these challenges.
Talent and Team Dynamics: In the topic of talent, Dimitrievich shared his approach to evaluating new opportunities and the importance of leveraging Nuveen’s platform and expertise. He highlighted the collaborative nature of the investment process at Nuveen.
Investor Concerns and Future Outlook: Dimitrievich addressed current investor concerns such as inflation, cost overruns, and the rate environment. He also discussed the potential impact of artificial intelligence on the economy and the importance of structuring investments to mitigate these risks.
Geopolitical Considerations: The discussion concluded with a look at global geopolitical factors, such as the onshoring of infrastructure supply chains, and how these trends create investment opportunities while mitigating reliance on foreign entities.
This fireside chat provided valuable insights into the strategic considerations and market dynamics shaping infrastructure credit investments, particularly in the energy sector. Dimitrievich’s expertise and Nuveen’s robust platform position them well to capitalize on these emerging opportunities.
Key Timestamps:
00:09 Introduction to Infrastructure Credit Trends
00:44 Background of Don Dimitrievich and Nuveen
02:09 Understanding Infrastructure Cycles
04:00 Current Opportunities in Power Generation
07:10 Investment Strategies in Infrastructure Credit
08:04 Risk Management in Credit Investments
11:39 Navigating Regulatory and Technological Risks
15:41 Challenges in Energy Storage Investments
21:27 Investor Concerns and Future Outlook
23:46 Navigating Geopolitical Risks in Investment Portfolios
25:10 The Role of Hyperscalers in Power Investments
26:26 The Future of Nuclear Energy in Data Centers
27:23 Conclusion and Final Thoughts