Core-plus infra is KKR’s top performer this year
Another earnings call, another tale of infrastructure’s outperformance.
At KKR’s Q3 earnings presentation, the asset class emerged as the strongest performer in Q3 and over the last 12 months, posting gross returns of 6 percent and 18 percent, respectively, beating all other asset classes. That outperformance comes from KKR’s flagship core-plus infrastructure funds and excludes investments made from KKR’s core infrastructure fund.
Infrastructure also accounted for about half of total capital markets transaction fees in Q3.
“Our global infrastructure business has now scaled to $77 billion of AUM,” noted KKR CFO Rob Lewin. “Remember, we were just $13 billion five years ago, and all of that growth has been organic.”
Lewin added: “We know that the need for infrastructure investment is massive. Our footprint here positions us incredibly well,” noting the firm is “particularly well positioned across all things digital”.
On the fundraising fund, KKR’s fifth flagship is showing some $10.3 billion raised, with its new Global Climate Fund at circa $2.3 billion.
Watch this space.
AustralianSuper is in no rush
Although there are some opportunities to be had in Australian transport, the country’s largest superannuation fund, AustralianSuper, is not desperate to land them.
“We don’t necessarily have to hurry on any of these sectors,” head of Australian real assets Nick O’Neil told our APAC editor Daniel Kemp in the fireside chat that kicked off our returning Infrastructure Investor Network Australia Forum, held in Melbourne last week.
“We’re investing for the long term; it also means we can be patient on the way in,” he said.
However, O’Neil also said the A$341 billion ($228 billion; €211 billion) superfund wants to position itself to “prosecute” strategic opportunities when they do arise – as one did at Perth Airport recently.
There, AustralianSuper increased its stake from 5.25 percent to 20.25 percent in what O’Neil called “a fairly efficient way”.
He said the superfund is also looking abroad for opportunities in transport, but said these opportunities, as in Australia, are “somewhat limited”.
More UK onshore wind repowering could be on the cards
After a successful sixth allocation of UK contracts for difference, the next round could allow repowered onshore wind farms to bid into the CfD scheme.
Such an amendment ought to increase the attractiveness of repowering onshore wind projects, as well as provide a boost to the valuation of older wind farms, investors tell The Pipeline.
“The ability to access CfDs, in addition to corporate PPAs, will allow onshore wind developers to expand their current range of revenue options for repowering opportunities and should lead to an increase in overall levels of investment activity,” says NTR’s CIO, Anthony Doherty.
Minal Patel, a partner at Schroders Greencoat, was also pleased with the proposed amendment: “It won’t work for all projects, but it will be good for the strongest projects that benefit from good wind resource. It should also be very helpful in underpinning the value of older assets as investors start to make more of a play in the repowering market.”
Allocation Round 7 is expected to open next year. To great fanfare, it seems.
Essentials
Send us your submission for our 2024 annual awards!
It’s global awards time! But this year, we’ve made some significant changes to Infrastructure Investor’s annual awards.
What’s changed? We have decided to discontinue our long-standing voting system. The winners in each category will now be decided by the same judging panel of Infrastructure Investor editors who previously focused on producing the shortlists, augmented by senior editorial staff from other asset classes. You can read all about the rationale behind that decision HERE.
What hasn’t changed? We still want your submissions, which you can send to us by clicking HERE. You have until Midnight (PT), 15 November to submit and, as usual, we’ve put together some handy guidelines, which you can download HERE.
Don’t miss your chance to share your successes with us!
Grapevine
“Are you getting your money back, plus a return from either a real economic moat or a contract? If you are, you’re probably in a good spot. If not, then you really need to think about how much headroom you’ve got on your entry price”
Hajir Naghdy, Stonepeak senior managing director and head of Asia and the Middle East, tells the II Network Australia Forum how the firm thinks about frothy data centre valuations
Who’s hiring
KKR’s Andrew Cocks targets wealthy for DigitalBridge
DigitalBridge has appointed Andrew Cocks as head of global wealth solutions, a newly created role that “aligns with our strategy to expand our offerings”, a spokesperson told The Pipeline, citing a growing demand for alternative investments in digital infrastructure.
“Andrew will work closely with Kevin Smithen, who is our chief commercial officer, and he will report directly to him,” the spokesperson said. “[His] focus will be broad, encompassing various sub-sectors within digital infrastructure, but his primary focus will be on expanding DigitalBridge’s relationships within the wealth management community, as well as the development of new products which have been customised for this channel.”
Cocks brings nearly two decades of experience to the role, having previously worked at Goldman Sachs Asset Management, Lyxor Asset Management and Blackstone. Most recently and for the past three years, he served as director in KKR’s private wealth partners business, “which aims to partner with leading private banks and wealth management platforms to distribute KKR funds”, according to his LinkedIn profile.
CBRE expands Asia-Pacific infra capability
CBRE Investment Management has appointed Vaughan Wallace as managing director of private infrastructure strategies for Asia-Pacific.
Based in Sydney, Wallace will oversee infrastructure investments in APAC, reporting to CIO of private infrastructure strategies Stephen Dowd.
Wallace brings more than 25 years of experience, having led infrastructure projects across the digital, transport, social and energy sectors, primarily in Australia and New Zealand.
Before joining CBRE, Wallace led London-based Amber Infrastructure’s APAC business, contributing to its first transaction in New Zealand, the acquisition in 2022 of five New Zealand social infrastructure assets, including three school PPPs, from Morrison for NZ$200 million ($120 million; €111 million).
Wallace has also held senior roles at infrastructure developer and manager Capella Capital, investment and advisory firm Babcock & Brown, and ABN AMRO’s infrastructure capital team.
Dowd said Wallace’s experience sourcing and managing infrastructure investments will help CBRE to expand its presence in the growing APAC market.
His presence in Sydney adds to CBRE’s infrastructure teams in Toronto and London.
LP watch
APG to find €1bn worth of co-investments for Swiss pension funds
Four Swiss pension funds with a combined AUM of SFr90 billion ($104 billion; €96 billion) have joined up with Dutch APG to access infrastructure co-investment opportunities for the long term (upwards of 10 years).
The new €1 billion vehicle will be managed by APG Asset Management and includes commitments from Pensionskasse Stadt Zürich, Publica, Pension Fund of Credit Suisse Group and Aargauische Pensionskasse. The contributions from the four pension funds are not equal.
APG will provide the co-investment opportunities for the co-invest fund, which “will invest in global infrastructure projects that will, among other objectives, accelerate the energy transition and enhance digital connectivity, with a focus on strong governance and the highest ESG standards”, APG tells The Pipeline.
Publica says it sees this vehicle as a supplement to open-end infrastructure equity funds it is already invested in.
Co-investments come in many shapes and sizes, but this particular cross-border configuration may actually be new.
ABL lukewarm on Australia
At last week’s Infrastructure Investor Network Australia Forum, there were some cautious voices amid all the positive talk about the opportunities to invest Down Under. One was that of ABL Life Insurance department head of alternative investment Jiroo Eoh.
Eoh started by saying Australia was a “good market” for Korean insurers to deploy capital into long-term, stable investments, but added that it had become relatively a bit less attractive than other markets.
“Australia was – using the word ‘was’ – attractive during or before covid,” he said. “But Korean insurance companies [like ABL] have been doing overseas investments for more than a decade, so they’ve learned since then, [and] they want to take more risk or [seek] higher returns.”
Higher interest rates had affected Australia’s attractiveness as in other markets, but Eoh said ABL has been struggling to see a “diversity of the product” in the country, with the insurer more focused on what he called “traditional” sectors as opposed to solely seeking investments in energy transition and transport assets.
And, as is common with Korean insurance companies, he likes debt investments, which he doesn’t see enough of in the Australian market compared with others. “I don’t know why the Australian market is not really popular for debt – maybe the banks are too strong?” he said.
Deals
DigitalBridge’s Japanese telco take-private
DigitalBridge has acquired a 75.62 percent stake in Japan-based telecommunication infrastructure developer JTOWER for ¥70 billion ($459 million; €425 million).
DigitalBridge bought the stake via a tender offer to become a co-shareholder alongside Cultive, an asset manager owned by JTOWER’s representative director Atsushi Tanaka, the company said.
The fund manager plans to delist JTOWER from the Tokyo Stock Exchange by the first quarter of 2025.
Tanaka believes DigitalBridge’s investment will boost capital efficiency and drive the advancement of infrastructure sharing in Japan.
Justin Chang, senior managing director and head of Asia at DigitalBridge, said: “This strategic investment underscores our confidence in JTOWER’s long-term potential and its critical role in advancing next-generation digital networks.”