February 2025 • infrastructureinvestor.

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EXTRA
Why data
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tied to AI

Direct investors’
bumpy ride
Infrastructure
Secondaries:
Taking off.
Infrastructure Secondaries
transaction volumes are expected
to nearly double in the years ahead.

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on Infrastructure
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 Contents

How to contact us
Senior Editor
Bruno Alves
[email protected], +44 20 7167 2031
Deputy Editor
Kalliope Gourntis
[email protected],
+30 6937 230 121
Americas Editor
Zak Bentley
[email protected], +1 646 921 1787 ISSN 1759–9539 • ISSUE 160 • FEBRUARY 2025
APAC Editor
Daniel Kemp
[email protected], +61 452 300 346
Senior Reporter, Energy Transition
Fundraising TOTR the key metric 18
Anne-Louise Stranne Petersen
[email protected], +44 20 3953 8632 Insight
Reporter, Americas Security We can’t protect
Justin McGown
[email protected], +1 646 921 0923
Reporter, APAC
Tom Taylor
2 all assets everywhere
Digital infra Uncertainty
19

[email protected], +61 434 322 075 Climate Reflecting on the LA fires

looms over AI and energy 20
Contributors: Charles Avery, Gina Gambetta,
Nathalie Tidman, Dominic Webb Fundraising Ridgewood
EDITOR’S LETTER 21
Managing Editor, Production: Mike Simlett closes Fund II on $1.2bn 4
Production Manager: David Sharman
Senior Production Editors: Tim Kimber, Deals Brookfield brings
Adam Koppeser
PD Ports back to market 6
Cover story
Production Editors: Helen Burch, Christine DeLuca,

22
Nicholas Manderson, Jeff Perlah
Copy Editor: Khai Ojehomon Fundraising Omnes Capenergie
Art Director: Mike Scorer 5 closes on €1.8bn 7
Head of Design: Miriam Vysna
Art Editor: Lee Southey US Energy transition predictions 8
“Can you do a better
Art Director – Americas: Allison Brown job than a manager
Senior Visual Designer: Denise Berjak
New Media Designer: Ellie Dowsett who’s got 50 or 100
Designer: Shanzeh Adnan
Marketing Solutions Manager
[specialists]?”
Hywel Grimmett
[email protected], +44 20 7566 5474 Is direct investing fit for
Subscriptions and Reprints infrastructure’s future?
[email protected]
Customer Services
[email protected]
Editorial Director, US: Rich Melville Analysis
Editorial Director: Philip Borel
Change Management Director,
Information Products: Amanda Janis
Director, Research and Analytics: Dan Gunner
30
Operations Director: Colm Gilmore Data centres AI only a ‘sweetener’
Managing Director, US: Bill O’Conor
Data centres Malaysia set to
Managing Director, Asia: Chris Petersen US Northern Trust exits NZAM 10
Chief Revenue Officer: Paul McLean become APAC powerhouse 34
Chief Executive Officer: Tim McLoughlin Deals Apollo, BC Partners invest in
Waste Diversified sector offers
waste management company 10
attractive risk-return profiles 38
Deals BII, FMO and SUSI partner on
Energy transition The global
Southeast Asia renewables 11
effort requires flexibility all-round 42
Fundraising StepStone
Sub-sea infra The complex
beats target for first infra fund 12
For subscription information visit
asset set presents unique risks 44
infrastructureinvestor.com The Pipeline Highlights
Data Manager in focus 46
from our weekly newsletter 14
Data Investor in focus 47
ET Hub Europe’s low power
demand is bad for the transition 17 Agenda 48

February 2025 • Infrastructure Investor 1

 W
hile flames
raged
across the
sprawling
landscapes
of Los
Angeles, oceans of ink were being
spilled around this once-in-a-lifetime
catastrophe and its causes.
Some say the Santa Ana winds,
also called the devil winds, is the
cause, while others investigate
the utilities whose transmission
lines may have ignited the blazes.
Still others will point to the failure
of water systems to support the Climate Reflecting on the Los
impossible notion of dousing entire
cities in a single night. But the true Angeles fires and collective memory
cause of the latest in a string of ‘first
ever’ wildfire events is not the failure Guest comment by Bill Green
of water pipes or electric lines but
the failure of our collective memory. struggle to absorb the lessons of When we fail to learn the lessons
Despite living in an age where these events. of the past and clearly consider our
information is abundant and The Santa Ana winds are not a current situation, we are doomed
accessible, we seem to have lost our novel phenomenon. What is new is to repeat the same behaviour (or
capacity to learn from the past and the unprecedented heat of 2024, lack thereof) until we recalibrate
use those lessons to foresee future a year that is now the hottest on our approach. This is particularly
outcomes. Images of past tragedies record. With LA parched after eight dangerous for infrastructure
in Fort McMurray, Canada, Santa months without rain, the stage was investors, whose mission is to
Rosa and Napa in California, and set for this disaster. We watched, acquire permanent, long-dated,
Lahaina, Hawaii flashed across our knowing pretty much what would immovable assets that can also be
phones. happen. And we know what will sitting ducks for physical, regulatory
We’ve seen winds fan fires into happen next when the rains come, and policy risks. In our roles we must
their own weather systems and chew with mudslides putting the finishing grasp that our future hinges not
through everything in the ‘wildland/ touches on the toxic waste dumps solely on the structures we buy and
urban interface’. Yet, despite this that are now Pacific Palisades and build but on the foresight with which
wealth of graphic knowledge, we Alta Dena. we buy or build them.

2 Infrastructure Investor • February 2025

Adapting to an evolving climate
Infrastructure – whether housing,
 The big numbers
highways, or power facilities – must Statistics can also tell a story.
be designed and built with a realistic Here are some worth noting
view on the evolving climate and
its challenges. Now is the time for
a paradigm shift in how we predict
and plan our future. Pumping of
untold quantities of greenhouse
gases into the atmosphere
has yielded results that are as
unpredictable as they are alarming.
“Circularity is no
longer optional
– it’s the key to
transforming
the sector”
€570m
Milan-based Vesper Infrastructure Partners is more than
halfway towards the €1bn target for its debut fund, which it
launched in August 2023
While not every climatic anomaly McKinsey’s Jukka
can be traced directly back to this,

1m metric tons
Maksimainen,
the overarching trend is undeniable: referring to the
our world is growing warmer, wetter importance of
and weirder. retrofitting the Volume of battery-grade lithium the US should produce annually
by 2035, that would allow it to become an exporter,
The path forwards lies in asking built environment
according to Jigar Shah, director of the US Department of
the right questions, informed by the Energy’s Loan Programs Office
best possible analytical tools. This
is the furthest thing from what we
used to call ESG. This is existential,  $1.3bn
and now arguably more urgent than
considering leverage, interest rates
and other historic cornerstones of
Ups
$150m
Amount the Teacher Retirement
Capital commitments
Ares Management had
secured in January for the
Ares Climate Infrastructure
infrastructure risk. What if there is System of Texas has committed
Partners II fund, which has
a fire or convective storm? How & to Northampton Capital
Partners, a fund that launched a final target of $3bn
intense could it be? What measures downs in November 2024 and which
is targeting investments in
can we take to protect assets during digital infrastructure, power and
the Santa Ana winds? And what if
the politics of the day urges us to  transmission, and transport in
North America
£800m
‘rebuild where we were’? These

$250m
questions aren’t new, but we’ve Cost of two new BESS projects CIP
is building in Scotland. With each
repeatedly failed to address them. project sized at 500MW, they will be
If we rebuild Altadena and the the largest battery storge projects
“With my actions Amount the New York State in Europe
Palisades without learning from Common Retirement Fund
today, we will
past mistakes, expecting different end the Green
committed to Oaktree
Capital Management’s Power
outcomes, we are engaging in New Deal, and Opportunities Fund VII
lunacy. It’s time to awaken our we will revoke the
collective memory, learn from electric vehicle
recent events and ensure our future
is not a repetition of past events.
Let’s embrace the art and science
mandate”

US President
Donald Trump
100,000 GPUs
Computing capacity UK should strive to reach by 2030, according to
of more effective prediction and a British venture capitalist Matt Clifford, who was recently
new approach to climate adaptive speaking during appointed as a part-time adviser to government ministers on AI
his inauguration
infrastructure. As we grapple with
ceremony in
these challenges, let’s use our
collective memory to illuminate a
safer, more resilient future. n

Bill Green is managing partner at

Climate Adaptive Infrastructure, a
January

 140GW
New generating capacity in offshore wind the Global Wind Energy
Council claims needs to be added between 2024 and 2028, for the
California-based investment firm world to meet 2030 renewables targets

February 2025 • Infrastructure Investor 3

 Insight

R
idgewood Infrastructure has
closed its second fund on
$1.2 billion, doubling the size
of its maiden vehicle, Zak Bentley
writes.
The US- and lower mid-market-
focused Ridgewood Water &
Strategic Infrastructure Fund II
exceeded its target of $1 billion and
builds on the $600 million raised
for its first fund, which closed in
February 2020. Launched in 2022,
Fund II had raised $673 million on
first close in August 2022, although
a market-wide decline in fundraising Fundraising Ridgewood
saw progress slowed.
“We were committed to seeing doubles debut vehicle to close
it through and our LPs were
supportive of our continuing to
Fund II on $1.2bn
engage in a disciplined manner,”
Sam Lissner, partner at Ridgewood, Fund I platforms. Deals include a eyeing a net internal rate or return
tells Infrastructure Investor. “In 2024, first-of-its-kind water PPP in Florida, of 12 percent and total value to
some of the conversations we had wastewater treatment group Waste paid-in ratio of 1.7x, according to
been having started to blossom. Resources Management, Valley documents from the Connecticut
Ultimately, we were able to exceed Cold Storage & Transportation and, Retirement Plans and Trust Funds,
our target and are very pleased somewhat unusually, a preferred which committed $150 million to the
with the success of our fundraise. equity investment in solar developer fund in December.
With Fund II at $1.2 billion, we are MN8 Energy, which operates over
very well positioned to focus on 3GW across 25 states in the US, Utilities focus
opportunities throughout the US marking Ridgewood’s entry into Significant realisations from
lower middle market.” utility-scale renewables. Ridgewood’s first fund were made
“MN8 was preparing to go public, recently, with the firm selling its
‘An exciting trajectory’ but the markets were too choppy for controlling interest in the Vista Ridge
Lissner adds that about $423 an IPO,” Lissner explains. Water Pipeline in Texas, to Ullico
million has been committed to four “They are a premier team with Infrastructure Fund, while in January,
investments to date, while further a terrific business that’s on an Fund I also sold its 80 percent
capital will also be added to existing exciting trajectory. At the time of interest in Texan utility SiEnergy
our investment, MN8 needed a to Northwest Natural Holding
partner to come in and support Company. About half of Fund I has
“ In 2024, some the continued growth of the now been realised, says Lissner.
business. We were able to create an “We focus on creating unique
of the conversations opportunity for the fund to invest businesses at the smaller end of
we had been having in a preferred equity position with the market where there’s greater
downside protection and significant optionality when it comes time to
started to blossom. upside potential for our investors in exit,” he says. “There’s only one
a part of the market where we had largest water P3 in US history, Vista
Ultimately, we were felt like many investors were being Ridge, that’s supplying 20 percent of
able to exceed relatively under-compensated for the fresh water to San Antonio under
taking significant risks.” a 30-year concession and there’s
our target ” In general, Ridgewood targets only one SiEnergy, which is among
Sam Lissner
investments in the water, energy, the fastest-growing regulated
Ridgewood Infrastructure transportation and utilities sectors, utilities in North America.” n

4 Infrastructure Investor • February 2025

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source for sustainability,
ESG and impact investing
in private markets

Insight on how investors In-depth analysis & research on Deep dives & commentary on
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 Insight

Deals Brookfield considers biomass and offshore wind projects,

it is understood.
revamped PD Ports sale
Back on the market
This is not the first time Brookfield
– which has owned PD Ports
since 2009 through its Brookfield
Infrastructure Fund I – has sought
to monetise the asset, having put it
up for auction in summer 2021 for
around £2 billion.
Having piqued the interest at the
time of South Tees Development
Corporation (STDC), UK port
operator Peel Ports and Macquarie
Asset Management, Brookfield
cancelled the sale in November the
same year.
Reports at the time claimed
that STDC – which was involved
in a lawsuit with PD Ports – was
unwilling to consider bidding
beyond £1.1 billion to £1.4 billion.
A spokesperson told Infrastructure
Investor at the time: “The recent
process has strengthened our

B
rookfield Asset Management the earliest, it is understood. conviction in the business, and we
is bringing its PD Ports PD Ports owns and operates 11 have made the decision to remain
business back to market and sites in the UK, with its Teesport and invested in PD Ports rather than sell
targeting a valuation that would give Hartlepool locations the largest in the asset.”
it a 20x EBITDA multiple, Nathalie terms of revenue generation. Brookfield’s 100 percent
Tidman reports. The projected revenue uptick ownership of PD Ports came
Teasers for the sale of up to for 2025 is based not only on the about as a result of a A$1.8 billion
a 50 percent stake in PD Ports – ‘landlord port model’ through which recapitalisation of Babcock & Brown
codenamed ‘Project Westeros’ the infrastructure is leased out to Infrastructure in 2009.
– have been circulated by sell-side private operators and industries, but The recapitalisation saw Brookfield
advisers RBC and CIBC, with the also on the strategically important acquire eight infrastructure projects
business valued at £2 billion ($2.4 location for the development of and invest in them partly from its
billion; €2.38 billion), a source listed Brookfield Infrastructure
with visibility on the deal tells Partners business, which in turn
Infrastructure Investor. invested in PD Ports via the first
Brookfield declined to comment
on the process. The teaser
document puts 2023 EBITDA at £66
£2bn
Brookfield’s target valuation
iteration of Brookfield’s infrastructure
fund series.
Hogan Lovells is acting as
million and £89 million for 2024, for PD Ports sell-side legal adviser on the latest
according to the source. deal. n
It stipulates a sustainable run-rate
that forecasts EBITDA of £100 million
for 2025, this person says. The sale
process is at a relatively early stage
20x
EBITDA mulitple that Brookfield is
Nathalie Tidman is the editor of
Infrastructure Investor Deals, a news-
driven, transaction-focused PEI Group
still, with the auction not expected to seeking for PD Ports publication that delivers details on
private capital-led infrastructure
kick off in earnest until February at transactions

6 Infrastructure Investor • February 2025

 Insight

Fundraising Omnes Capital’s Capenergie 5 beats

hard-cap to close on €1.8bn

O
mnes Capital, an energy far the hard-cap of the fund in two with the new fund already backing
transition-focused years, which is a standard duration seven portfolio companies. They
investment firm based for a fundraising of this kind,” include a renewables IPP in
in Paris, has raised €1.8 billion for Savasta says. “We see a benefit Portugal, TagEnergy; Germany-
its latest vehicle, exceeding its to having secured smaller tickets, based onshore wind and solar PV
€1.65 billion hard-cap and raising as it helps diversify our clientele developer Erneuerbare Energien
an additional €250 million in co- even more, with sufficient room to Fabrik; Swedish solar PV developer
investment capital, bringing the [onboard] new LPs from outside Turn Energy; CCE Holding, an IPP
total haul to €2.05 billion, Kalliope Europe.” focused on solar PV with locations
Gourntis reports. The pace of deployment for in Austria and Germany; Greek
Capenergie 5 achieved a re-up Capenergie 5 has been healthy, solar PV, onshore wind and BESS
rate of nearly 100 percent, as well as developer Faria Renewables; Enova
attracting commitments from new LP Value 2.0, a Germany-based joint
clients, the Paris-based firm said. venture focusing on onshore wind
Asked about the decision to raise repowering; and Enray Power
a fund significantly larger than its (formerly known as Integrum), a
previous vintages, Omnes CEO solar PV and BESS developer in the
Serge Savasta tells Infrastructure UK.
Investor: “With the €900 million “The seven portfolio companies
Capenergie 4 programme, we laid are in the process of transforming
the foundation for supporting our from developers to IPPs,” Savasta
portfolio companies’ growth. To says. “We will have deployed 40
enable them to become leaders in percent of capital by mid-2025.”
their markets, we saw an opportunity Omnes aims to make 10
to scale our resources even more. investments through Capenergie 5
This is the reason why we decided to and has other deals in the pipeline.
increase the size of the Capenergie “Our goal is to have a strongly
5 programme.” diversified portfolio, geographically,
Despite being significantly but also in terms of technologies,
larger and raised in a challenging with utility-scale solar, onshore wind,
fundraising climate, the fund took 24 including repowering, and a focus
months to reach final close; slightly “ We see a benefit on BESS as well.” Omnes managing
longer than the 20 months it took partners Marc-Philippe Botte and
Omnes to raise €660 million for to having secured Michael Pollan will manage the fund.
Capenergie 4 as well as the €240 Capenergie 5 is the first Omnes
million in co-investment capital.
smaller tickets, as it fund to reach a final close since
helps diversify our French private equity firm IDI bought
Healthy deployment pace and carved out Omnes Capital’s
Omnes managed to buck the trend clientele even more, buyout division and took a minority
reflected in our FY 2024 fundraising stake of more than 40 percent
report, which has seen funds take
with sufficient room in March 2023, allowing Omnes
an average of 31 months to reach to [onboard] new LPs to remain focused on renewable
final close. Per the report, one of energy, sustainable cities, deeptech
the reasons for the fundraising from outside venture capital and co-investment.
slowdown is smaller LP ticket sizes.
“We experienced smaller tickets
Europe ” At the same time, Savasta was
made CEO, taking over from Omnes
as well but were able to exceed by Serge Savasta, Omnes Capital Capital’s founder Fabien Prévost. n

February 2025 • Infrastructure Investor 7

 Insight

US Six predictions for the energy scrambling to secure safe harbour

provisions for their renewable
transition in 2025 energy projects. This dynamic is
driving a surge in construction starts
for solar, wind and battery storage
projects, mirroring the behaviour
observed during past phase-outs
of cash grants and Investment Tax
Credit incentives. Historically, the
Guest comment by Izzet Bensusan
renewable energy industry has
responded to policy deadlines with

T
he global energy the next two years, grounded in a rush to lock in favourable terms.
transition is historical trends, emerging market For example, during the final years
accelerating at an data, global macro and political of the Production Tax Credit, wind
unprecedented environment, and the strategic installations surged in 2020. With
pace, driven by priorities of key stakeholders, signals similar urgency, the US solar industry
factors ranging the following six opportunities and is expected to install more than
from government policies to challenges that lie ahead. 30GW of new capacity annually
reduce emissions and promote through 2025 to ensure eligibility for
sustainable development to growing
innovation and private-sector 1 Surge in construction and
new starts
maximum IRA benefits.

commitments to decarbonisation.
The Inflation Reduction Act has
been a cornerstone of US climate
In the first half of 2024 alone,
renewable energy projects attracted
$313 billion in new investments.
2 Bulk purchases of key
components
Anticipating potential tariffs and
policy, unlocking billions of dollars The US Energy Information supply chain bottlenecks with
for renewable energy projects Administration projects solar the Trump administration in
and creating fertile ground for capacity to grow by 75 percent office, developers and EPCs are
technology advancement. and wind capacity by 11 percent accelerating the procurement of
As we step into 2025, the between 2023 and 2025. solar panels, inverters and batteries.
landscape is poised for a period As possible changes to IRA The US utility-scale solar costs could
of significant change. Investors, benefits loom, developers are rise by up to 30 percent due to
developers and policymakers are proposed tariffs on Chinese imports.
grappling with the uncertainties With China keeping its throne as
posed by the potential expiration “ With China the dominant global supplier of key
of the Trump-era tax cuts at the end keeping its throne solar and battery technologies and
of 2025 and its implications for the equipment, the potential impact of
IRA, fuelling a rush to capitalise on as the dominant tariffs or trade restrictions stands
existing incentives and deploy next- out as a critical consideration. The
generation solutions. global supplier of strategy to hedge against rising
The energy sector is undergoing key solar and battery costs and ensure timely project
seismic shifts. From a surge in completion echoes the “gold
construction and bulk procurement technologies and panel” rush during prior subsidy
of key components to the rise of phase-outs, where developers bulk-
hybrid power generation solutions equipment, the purchased components to mitigate
and state-level compensatory potential impact financial risks.
actions, the energy transition is a
of tariffs or trade
nuanced interplay of market forces
and a surge of new investors,
regulatory frameworks, political restrictions stands 3 Hybrid power generation
solutions
The rising demand for electricity,
landscape and technological out as a critical particularly from energy-intensive
breakthroughs. The Magic 8 Ball sectors such as data centres with
for the energy transition over consideration ” the AI boom and manufacturing, as

8 Infrastructure Investor • February 2025

 Insight

well as electrification of everything,

is driving the adoption of hybrid
power generation solutions.
this dynamic creates short-term
windfalls for asset holders while
increasing competition among
6 Technology shifts: CCS,
SMRs and beyond
The energy transition is not
Pairing gas-fired plants with buyers, it also underscores the limited to traditional renewables.
renewable sources like solar or importance of regulatory clarity in Emerging technologies are playing
wind allows for both reliability sustaining investment momentum. an increasingly significant role.
and compliance with corporate Carbon capture and storage, small
sustainability targets. In 2023, 80
new hybrid plants began operating
across the US, with Texas, California
5 State-level regulatory
actions
As federal incentives face potential
modular reactors and advanced
battery systems are gaining traction
as viable solutions to decarbonise
and Florida leading the wave. reductions, states are stepping in hard-to-abate sectors.
These hybrid systems can also to sustain investment momentum. The US is the global leader in
reduce wholesale market costs by Compensatory programmes, such CCS, and its capacity is expected
increasing the competition among as state-level ITC extensions and to increase sevenfold in the next 10
suppliers, since they combine highly renewable portfolio standards, as years. The US government is also
cost-effective sources of generation well as other investment enticements pushing for innovation in nuclear,
with storage. They offer a practical such as low taxes and fast permitting as the Department of Energy
pathway to meet the growing times are becoming critical tools announced $900 million in funding
demand for green energy while for driving local renewable energy to support the deployment of next-
ensuring grid stability. Hybrid plants development. generation SMRs.
in Texas are combining natural Texas is the prime example. The While wind and solar remain the
gas and solar power, and they are Lone Star State has emerged as a backbone of the energy transition
creating a model for scalable and leader in renewable energy capacity, and a sustainable future, nuclear
sustainable energy production. installing nearly 80 percent more and CCS are addressing critical
solar, wind and battery capacity than gaps in baseload power and

4 Developer premium on
assets
The lack of certainty surrounding the
the next largest state thanks to the
permissive regulatory environment.
In 2024, wind and solar farms
industrial emissions. Simultaneously,
innovations in fusion technology and
grid-scale batteries are creating new
post-2025 regulatory environment generated around 30 percent of frontiers for clean energy. n
is driving up the demand for energy Texas’s electricity. California, New
transition assets. Developers and York and Illinois are on track to
investors are capitalising on this, and follow in these footsteps and are also Izzet Bensusan is CEO and founder
of Captona, an energy transition-focused
it leads to premium pricing for solar, introducing innovative programmes investment firm, headquartered in
wind and battery projects. Whereas to attract private investment. New York

February 2025 • Infrastructure Investor 9

 Insight

US Trillion-dollar asset manager exits Deals Apollo,

NZAM and Climate Action 100+ BC Partners
take stakes in
$8bn waste
N
orthern Trust Asset US operation, State Street Global
Management has become Advisors, Franklin Templeton and
the latest of the large US JPMorgan Asset Management. management
managers to leave Climate Action MFS Investment Management
100+, and the third major manager and Muzinich & Co left the climate company
to exit the Net Zero Asset Managers engagement initiative earlier last
initiative (NZAM), Gina Gambetta month.

P
and Dominic Webb report. Among the big investors, only rivate markets firms Apollo
A spokesperson for the firm Vanguard and BlackRock are known Global Management and BC
told affiliate title Responsible to have left NZAM. The group Partners have struck a deal to
Investor it had dropped out of announced a temporary pause each acquire a 28 percent share in
both initiatives in a decision which on many of its activities pending the environmental services business
“reflects our confidence that we a review of how it can ensure it of Canadian waste management
can independently and effectively remains fit for purpose “in the new business GFL Environmental,
manage material risks and engage global context” after BlackRock’s according to a statement, writes
with portfolio companies to departure. Charles Avery.
safeguard and grow our clients’ The Northern Trust spokesperson The fourth-largest environmental
capital”. added that the firm “has made and services company in North America,
Northern Trust had been an active continues to make investments GFL provides waste management
member of the coalition. In 2023, that support our independent and soil remediation services.
it co-led engagements with Czech stewardship and sustainable The deal values the business
utility CEZ and the UK’s National investing capabilities”. at $8 billion. GFL will retain a 44
Grid, as well as contributing to In August, it hired Paul Clark percent stake in the environmental
engagement groups targeting from UBS Asset Management to fill services business. The transaction is
Valero Energy, Bayer, UltraTech the role of stewardship head and expected to close in Q1 2025.
Cement and South32. announced it would be offering split It is not clear which Apollo funds
voting to investors in pooled funds. have invested in the company,
‘New global context’ The firm was ranked 33rd in though partner Craig Horton
The move, which came the day after a 2023 ShareAction report on describes the deal as “a great
Donald Trump’s inauguration as environmental and social voting example of partnership capital
president, leaves Wellington as the practices by large asset managers, from the Apollo Funds, including
only US manager with more than $1 but was the second-highest ranked our hybrid value and infrastructure
trillion in CA100+. It follows the exits US manager behind Federated strategies”. The firm declined to
of many peers including BlackRock’s Hermes. n comment when contacted by affiliate
title New Private Markets.
Apollo has a target of deploying
$50 billion in clean energy and
climate capital by 2027. Clean
Transition II – Apollo’s first dedicated
private equity climate vehicle – came
to market in 2024, per NPM data.
Clean Transition I, meanwhile, is a
2023 debt and hybrid evergreen
fund with $4 billion in investable
capital. Apollo also has an energy
transition-focused ELTIF targeting
private wealth clients in market. n

10 Infrastructure Investor • February 2025

 Insight

Deals BII, FMO partner with SUSI on “Our priority markets include
the Philippines, Indonesia and
Southeast Asia renewables platform Vietnam, and as of the end of last
year we have invested around $200
million into this region, having only

B
ritish International Investment It will also have a “secondary started in early 2023. There is a lot
and FMO, the development focus” on storage assets in those of climate money that is willing to
finance institutions of the UK markets, says SUSI Partners’ head of come into these economies, but
and the Netherlands, have joined Asia, Wymen Chan, adding that the there is a lack of demonstrable
with SUSI Partners to create a new firm wanted to focus on “speed to feasibility.”
utility-scale renewable energy market”. On what BII is looking for from
platform that will invest across “We are very much focused on investment managers and external
Southeast Asia, Daniel Kemp delivering quality assets but with partners in the region, Nagarajan
reports. some sense of time urgency. We’ve says the organisation is “product
The partners will initially commit given ourselves three years to try to agnostic”, given that it invests both
$150 million to the platform, which get to 300MW in construction and indirectly through managers and
has been named Sustainable in operation. With that in mind, we directly through debt and equity,
Asia Renewable Assets, with the narrowed our focus to wind and and by providing trade finance to
commitments comprised of capital solar, being the fastest to market and commercial banks.
from the SUSI Asia Energy Transition construction.” “We are much more sector-
Fund and co-investments from BII focused,” he says. “It’s our ability to
and FMO. BII in Southeast Asia come in and take those early-stage
BII is investing $70 million in SARA Speaking to Infrastructure Investor, risks where commercial investors
and a top-up commitment to SAETF, Srini Nagarajan, BII managing might be a bit nervous of coming in
after it invested $15 million in the director and head of Asia, says the – [that is] where we really specialise.”
fund in 2023. FMO is investing $50 organisation aims to be “catalytic He adds that a particular area of
million, again split between SARA in nature” and attract commercial focus for the region is transmission
and a top-up commitment to SAETF, capital to its projects. infrastructure, having recently
in which it was already an LP. SAETF “Our job as a DFI, alongside invested $300 million alongside
held a final close on $120 million in our partners like FMO, is to create Norfund in Indian company Energrid
May 2023 before re-opening for top- a platform from scratch that will to help them develop in this area.
up investments in 2024. eventually attract commercial capital Nagarajan also cites EV
SARA aims to build a 500MW into these markets. infrastructure, waste and wastewater
portfolio of greenfield renewable “Southeast Asia is a very important management, and climate
energy assets by the end of market for BII to commit at least 30 technology as areas of interest for
SAETF’s fund life, focusing percent of our new commitments the organisation.
initially on wind and solar into the area of climate finance – and On the progress of SAETF’s
investments in markets in Southeast Asia we only focus on deployment, Chan says that the fund
such as Vietnam and the climate finance. We are aiming to is now around 60 percent deployed
Philippines. invest around £500 million ($617 – “well within expectations” – with
million; €592 million) in climate the pace set to pick up following
finance by 2026 and that’s the whole the establishment of the SARA
objective here. platform. n

February 2025 • Infrastructure Investor 11

 Insight

Fundraising StepStone raises

S
tepStone Group has reached
a final close on StepStone
Infrastructure Co-Investment $1.2bn for inaugural infra fund
Partners 2022, raising roughly $1.2
billion, plus an additional $200 beating target
million in co-investments, Justin
McGown reports.
The close far surpasses the fund’s
initial target, which according to
information from the Construction
Workers Pension Scheme of Ireland,
stood at $750 million. StepStone
declined to comment on the fund’s
target.
“Obviously we’re very pleased,”
Todd Lapenna, partner at StepStone
on the infrastructure and real assets
team, says of the oversubscribed
raise while discussing the close with
Infrastructure Investor. “We do think
it’s reflective of the relationships
we have and the wide swath of the
market that we cover, as well as a
very robust pre-fund track record
across billions of investing capital
“ We do think it’s the right sector as we think about
portfolio construction to drive best
through co-investment. reflective of the performance”.
“We’re grateful to our clients and One result of that approach was
the LPs in the fund for their support.” relationships we more of an emphasis on the mid-
Lapenna says there is the market compared with larger fund
possibility of a follow-up fund
have and the wide managers, he says, but co-investors
sometime in 2026 but adds that for swath of the market and GPs were both supportive of the
the short term the emphasis will be move.
on making use of the current raise. that we cover, as That being said, according to
the aforementioned Ireland-based
Focused on delivery
well as a very Construction Workers Pension
“We’re very focused on delivery robust pre-fund Scheme, the fund’s investments so
for the investors in the fund, so far include the Blackstone-backed
finding the right assets, the right track record across Italian road operator Mundys
co-investments, is a key focus right (formerly Atlantia), DigitalBridge
now,” Lapenna says. “We’re roughly
billions of investing and IFM Investors’ data centre
half invested to date, and we have capital through platform Switch, the Brookfield Asset
roughly 20 discrete co-investments Management-owned container
in the fund, so part of what the co-investment ” leasing company Triton International
fund delivers is diversity across Todd Lapenna, StepStone and the 850MW Waratah Super
sectors. There’s diversification in key Battery storage project in Australia
geographies like the US, Western while seeking secular trends across owned by Global Infrastructure
Europe, the UK and Australia. For digital infrastructure, AI and the Partners, a part of BlackRock.
the most part, [it’s] OECD-focused energy transition. StepStone has deployed about
and very focused on delivering that Lapenna emphasised that the $13 billion per year in infrastructure
across different GPs.” diversity of exposure in the fund’s over the past three years, managed
The SICP strategy focuses on core- investment was achieved by by an 80-person global investment
plus and value-add opportunities, finding the “the right partner in team. n

12 Infrastructure Investor • February 2025

Comprehensive coverage
of the world’s private real
estate capital markets

Award-winning insights of In-depth analysis & Deep dives & commentary on

industry developments & research of the private real the RE investing landscape, with
GP/LP relationships estate market funds in market & activity

Find out more

www.perenews.com
 Insight

First look A bite-sized briefing on fundraising,

policy news and market trends

1
BlackRock expects $5bn from the older GIP fund vintages growing private markets business,
from GIP-related exits executing on successful exits.” can support, obviously, above trend,
in Q1 GIP, a part of BlackRock, whose above target, long-term targets”.
“GIP has a strong track record of acquisition BlackRock completed BlackRock’s 2024 financial results
operating portfolio companies last October, “contributed to about were released a day after OpenAI’s
and ultimately returning capital one-half of a percentage point to the board chair Bret Taylor announced
to investors through exits with overall 7 percent organic-based fee the appointment of GIP founding
strong uplift,” BlackRock CFO growth”, Small clarified, noting that partner Bayo Ogunlesi to its board,
Martin Small said during the “it didn’t have an outsized impact citing his “exceptional track record”.
firm’s FY 2024 earnings call last on this quarter’s [Q4 2024] above- Seems the power of a strong track
month. “At present, we expect to target outcome”. But, BlackRock record can never be overstated.
recognise approximately $5 billion believes it’s “a good indication that

2
of realisations in the first quarter a growing infrastructure business, a Biden’s leaving gift:
federal land for AI data
centres
Capital raised by funds holding a final close
A few days before leaving office,
Capital raised ($bn) Numbers of funds closed
former President Joe Biden signed
180 180
an executive order directing the
160 160 departments of defence and energy
to lease federal lands to the private
140 140 sector for the sake of building AI
data centres.
120 120 “We will not let America be
out-built when it comes to the
100 100
technology that will define the
80 80
future, nor should we sacrifice critical
environmental standards and our
60 60 shared efforts to protect clean air
and clean water,” Biden said.
40 40 The release stresses the strategic
and economic necessity of AI
20 20
dominance, which the federal
government has been directed to
0 0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 support primarily via the leasing.
Interested developers will pay
Source: Infrastructure Investor the full cost of construction and
operation, be required to use

14 Infrastructure Investor • February 2025

 Insight

Who’s hiring A brief look at

recent people moves

Schroders Capital names Minal

renewable or nuclear energy
exclusively, assess the security Patel its new global head of infra
implications of their projects and
rely on domestic semiconductors. The firm has promoted Patel to the newly
All without impacting local created role of global head of infrastructure,
electricity prices. with immediate effect, per a statement

3
‘Get your act together’, “Minal’s appointment reflects the growth of our infrastructure
Finland tells KKR/OTPP- business and the importance of a consolidated proposition at
owned Caruna Schroders Capital, which has now been established across each
It hasn’t been a glorious 18 months of our four asset classes,” a spokesperson told The Pipeline.
or so for Caruna, Finland’s largest One of those four asset classes is infrastructure, which primarily
electricity distribution company, comprises Schroders Greencoat – the new entity that resulted
whose shares are 80 percent owned from Schroders’ 2022 acquisition of Greencoat Capital.
by KKR and the Ontario Teachers’ Patel joined Greencoat Capital in 2019 as a partner “and
Pension Plan. An unfavourable has most recently led the oversight of its private institutional
change in the regulatory regime in funds, the structuring of new investment opportunities and the
2022 saw the pair write down the widening of investor relations”, according to the statement. She
asset, The Pipeline understands, will lead Schroders Capital’s global infrastructure business and
leading the investors to pursue legal will work with the wider senior team to set the global strategy, the
action. spokesperson said.
Last month the regulator,
Energiavirasto, came back at Morrison to wield Swords in Europe
Caruna, accusing the company that
it “deliberately and systematically Shane Swords, previously IR supremo at NextEnergy
reduced its customers’ subscription Capital, will be Morrison’s new head of distribution for
investments and slowed down Europe, the New Zealand GP announced
the delivery of subscriptions to its
customers due to its own financial Swords’ experience has been focused on the solar
interests”. Customers had apparently sector where he has raised capital for Lightsource bp,
waited 14-17 months for grid Downing and, since 2019, NextEnergy. Recently, he has
connections. led the fundraising for the $1.5 billion-target, PV and
In a statement, the regulator said: battery storage-focused NextPower V ESG, launched
“The Energy Authority considers that in 2023. At second close, the fund had $580 million in
Caruna’s financial situation or control commitments alongside $150 million in co-investment capital.
methods are not relevant when Morrison invests across several verticals, with its flagship
assessing the reasonable connection open-end, core-plus Partnership fund collecting $3 billion in
time of customers”, before commitments since launching in October 2021.
concluding that Caruna should The GP has $28 billion of AUM and manages the New Zealand-
“get its act together” and “eliminate and Australia-listed infra investment fund, Infratil, with an NZ$11.5
unjustified delays in the delivery of billion ($6.45 billion; €6.27 billion) market capitalisation. n
customers’ connections”. n

February 2025 • Infrastructure Investor 15

 Insight

Macquarie’s $5bn Applied Digital deal

Macquarie Asset Management has committed to a $5 billion perpetual
preferred equity financing facility for Applied Digital Corporation’s high-
performance computing (HPC) business.
The deal includes an initial $900 million investment in the 400MW
Ellendale HPC data centre campus. MAM will invest $2.25 million per
1MW of leased capacity, with a 12.75 percent annual dividend rate.
Deals In the The agreement grants MAM a 15 percent common equity stake in
Applied Digital’s HPC business, while Applied Digital retains 85 percent
spotlight ownership. The investment will help repay existing debt, recover
Applied Digital’s equity investment and fund future projects, Applied
Digital said in a statement.
Origis charges up with $1bn MAM also secures a right of first refusal on future HPC data centre
from Antin and Brookfield funding up to $4.1 billion over 30 months.
Origis Energy, a US renewable The Pipeline understands that MAM is investing through
energy project developer and its Macquarie Infrastructure Partners VI fund, representing MIP VI’s ninth
operator, has secured more than portfolio company investment commitment.
$1 billion in investments from
Brookfield Asset Management
and existing majority owner Antin
Infrastructure Partners.
Infrastructure Investor understands
that Brookfield’s investment comes
through its recently-launched
Infrastructure Structured Solutions
Fund. The new capital is intended
to support Origis’s growth as an IPP
and expand its solar and battery
energy storage systems asset
portfolio.
Origis currently operates a 1GW
solar and storage portfolio across
four states, with an additional 3GW
of projects under construction or
construction-ready, and a total
development pipeline of 25GW.
Antin acquired a majority stake –
the exact size was not disclosed at The deal has been funded particular are among AEP’s fastest-
the time – in Origis Energy in 2021. by KKR’s Diversified Core growing service territories thanks to
Origis’s solar and BESS ambitions Infrastructure Fund. For Canadian the newer sources of load growth,
are now fully charged and ready to pension PSP, managing director the statement said. That’s in part due
shine. Michael Rosenfeld said the deal to “tailwinds from digitalisation and
is “an important milestone in PSP reshoring of critical manufacturing”,
KKR and PSP plug into AEP with Infrastructure’s roll-out of its High Rosenfeld added.
$2.82bn deal Inflation Correlated Infrastructure”, AEP said in a statement the deal
KKR and PSP Investments have which he said is investing in “North was valued at a multiple of 30.3
agreed to buy a 19.9 percent American core infrastructure times the past 12 months’ price-to-
stake in American Electric Power’s assets that exhibit a defensive and earnings ratio. n
Ohio, Indiana and Michigan power predictable inflation-linked cashflow
transmission companies for $2.82 profile”, according to a statement. Monthly highlights from our weekly
billion in an equal partnership. Ohio, Indiana and Michigan in newsletter The Pipeline

16 Infrastructure Investor • February 2025

 Insight

Energy Transition Hub Europe’s lacklustre power

demand is hampering the transition

Comment

Expert analysis by Anne-Louise Stranne Petersen

percent year-on-year, according to

Eurelectric, a trade association for

W
hen managers are diminished by industrial productivity the European electricity industry.
prompted for their still under the impact of the In terms of emissions, all is well.
views of European pandemic and by gas becoming 2024’s European power sector
power prices, they usually either scarce and costly in the run-up to emissions were cut by 59 percent
sigh heavily or promptly move the Russia’s invasion of Ukraine. compared with 1990 levels, and
conversation to how demand will That war, and the energy crisis it fell by no less than 13 percent from
and must grow over the coming prompted, has left a lasting scar: 2023, as more renewable energy
decades. But, considering the strong despite increased electrification of entered the power mix last year.
drivers of the continued push for vehicles and industry, not to mention However, to continue the build-out
electrification and the build-out of the build-out of data centres, the EU of renewable energy generation,
data centres already in play, last still used less electricity in 2024 than the low demand for power is less
year’s meagre 1.3 percent growth in it did in 2020 – that first, locked- than ideal given that it is likely to
EU’s demand for power, compared down year of covid-19. be accompanied by lower power
to 2023, is hardly encouraging. prices. Indeed, the average EU day-
The subdued demand is not a Falling consumption ahead wholesale electricity price
new situation; what’s new is that it While some of this lower electricity declined by 16 percent in 2024,
continues. And the longer it goes use comes from improved energy according to Eurelectric. Across EU
on, the harder it becomes for efficiency, the industrial slowdown pricing zones, there were a record
developers to state with anything also contributes. Germany’s 1,480 occurrences of negative
resembling certainty that this too industrial power consumption pricing in 2024.
shall pass. decreased by 13 percent in 2023 Hence, without increased demand
The five-year anniversary of the compared to 2021, and the 2024 for energy, the generation capacity
covid-19 pandemic coincides with industrial production declined 4 already under construction will
it being a full five years since the only serve to make it increasingly
European power markets were uneconomical to add more green
behaving in an orderly fashion in generation to the European grid.
terms of demand, albeit with one
exception: 2021’s demand for
electricity did what was expected
of it, growing 5 percent on covid-
13%
Decrease in Germany’s industrial
Fighting Europe’s lack of growth
will matter not only to economic
policies and political stability – it will
be crucial to its decarbonisation
impaired 2020. But this growth in power consumption in 2023 efforts, too. n
compared to 2021, according
demand was arguably a shadow to Eurelectric
of what it should have been, [email protected]

February 2025 • Infrastructure Investor 17

 Insight

Fundraising The most important metric: TOTR

took the entirety of 2024 to raise that
Comment remaining €1.2 billion. At that rate, it
would’ve taken Antin Infrastructure
Partners another two years to hit
Expert analysis by Bruno Alves Fund V’s €12 billion hard-cap.
Antin’s final close announcement
touted 120 new LPs. You don’t have

J
ust when you thought big jump from the 17.6 months it to be a soothsayer to read the tea
fundraising for unlisted, took managers on average to close leaves here: this was a long slog
closed-end structures couldn’t a fund from 2019 to 2023. spent knocking on more doors for
get any worse, 2024 claimed its spot A look at 2024’s biggest fund smaller cheques. We’re not picking
as the poorest fundraising year since close – the €10.2 billion Antin on Antin – we’re sure a similar
2015. How bad was it? Bad enough Infrastructure Partners V – is analysis of many of the large-cap
for fundraising to dip below the illustrative of the difficulties faced. funds to close in 2025 will yield a
$100 billion mark for the first time similar story.
in nearly a decade and to end up And that’s precisely why TOTR is
considerably worse than the $128
billion raised in 2023.
The flipside to this is that 2025 will
inevitably be a better fundraising
31.3months
Average time it took funds
so important right now: if 31 months
on the road (or close to it) is the
new normal, it’ll raise a number of
uncomfortable questions.
year. We’re not being flippant here still in market in 2024 to reach For example, can smaller
a final close
– a cursory look at the top 10 funds managers (let alone first-time ones)
in market shows them looking for handle the various costs associated
nearly $144 billion. Many of those with such a protracted fundraising
vehicles are a) mega-funds and b) period? If not, will that inevitably
in market long enough to allow us accelerate consolidation? Will fund
to predict confidently that they will, targets, which had been growing
indeed, reach a final close this year steadily in infrastructure, reverse
(bar any black swans). course? And if the latter takes
If you want a conservative hold, how long before the market
estimate, we predict that at least $80 stagnates?
billion of those $144 billion will hit Right now, a sort of cognitive
a final close in 2025. Add up all the dissonance rules the day, with
other vehicles that will close outside the demand for AI infrastructure
of that large-cap top 10 and you can and energy transition investments
glimpse the pathway to surpassing requiring almost unimaginable
2024’s woeful tally. amounts of capital, and LP surveys
Does that mean 2024 was rock- stating there’s plenty of room for
bottom for infrastructure fundraising, growth in infrastructure allocations…
then? That’s a harder question to In October 2022, the French coupled with the reality of a steep
answer. But much will depend on manager announced a first close of decline in year-on-year fundraising
how long it takes managers to raise €5 billion for its fifth flagship, hitting for the second year in a row.
funds going forward. the halfway mark roughly six months That decline will, as mentioned
after launching the fund – the kind of above, almost certainly reverse
Hit the road speedy performance you’d expect course in 2025. But the real reason
Time on the road (TOTR) has been from a blue-chip. By the end of 2023, to cheer will be if TOTR reverses
on the rise since 2021, with funds it had raised €9 billion, according to course too. n
closed in 2024 taking a whopping our data, meaning it took over a year
31.3 months to reach a final close – a to raise a smaller €4 billion. It then [email protected]

18 Infrastructure Investor • February 2025

 Insight

Security The impossibility of pipeline, was damaged in October

2023 along with a Swedish-Estonian
protecting everything everywhere fibre cable. The perpetrator was
the six-tonne anchor of a Chinese
container ship, dragged for 180km,
but it was stormy, so the damage
Comment may have been unintentional.
Fool me once and all that, so
when two data cables were cut last
Expert analysis by Anne-Louise Stranne Petersen November with a Chinese bulk
carrier in the vicinity, the impacted

T
he year 2025 has begun as Asset Management, Arcus, APG, PSP countries of Sweden, Germany,
2024 ended: with sabotage Investments and Credit Agricole. Finland and Lithuania were keen
to infrastructure assets. NATO The company is alert to lurking to investigate. This time, private
was prompted to launch the Baltic dangers, says Antoine-Paul Savelli, infrastructure took a hit as the sub-
Sentry patrol last month to improve head of infrastructure, operations sea BCS East-West Interlink, one of
the protection of the area’s critical and energy at TDF Infrastructure: “In the damaged cables, is ultimately
infrastructure, and the Taiwanese preparation for the Paris Olympic owned by the Swedish State pension
are investigating a slew of damaged Games, we started a really strong funds, AP1, AP3 and AP4.
communication cables. protection programme for key To round things off in the Baltic,
While the implications of sabotage infrastructure in 2021. It means the 650MW Estlink 2 interconnector
on private market operations have protection of the perimeter, between Finland and Estonia
been limited so far, managers are protection of the sites, but also sustained significant damage on 26
engaging with ever larger and cyber-protection of the networks. December, most likely caused by an
increasingly multi-jurisdictional In this case, we were able to re- oil tanker, with Russian connections,
assets. The question of keeping establish the television broadcasting dragging its anchor across it.
assets safe is no trifling matter; nor is the day after.” Ultimately, investors in this sector
it being treated like one. And it isn’t will have to anticipate such threats,
always clear who the enemy is nor Harder-to-protect assets while system operators reliant on
the purpose of the destruction. Such preparedness is key, but other such assets must consider new
One such event was the 30 kinds of assets, particularly those structures to keep operations
December arson attack on a French submerged in hard-to-police waters, intact. In Taiwan, the sub-sea fibre
telecoms tower: 800,000 people lost are significantly harder to protect. cables are backed-up by satellites.
their TV signal, but the damage was The Baltic Sea has seen more than As for energy distribution, only an
limited. No one has taken the blame its fair share of sabotage, such as extended and more varied network
or stands to benefit. the 2022 destruction of Gazprom’s will do.
The tower belongs to TDF Nordstream pipelines. The In contrast, telecom towers
Infrastructure, owned by Brookfield Balticconnector, a Finland-Estonia and other types of distributed
infrastructure are more structurally
resilient. “TDF has 8,000 towers on
French territory. Even if one tower is
important, we can always broadcast
the signal from another one close
by… we have spare capacitors,
transmitters, feeders and antennas
for critical equipment… we have
mobile pylons too, ready to be
rolled out,” Savelli says.
Not a bad place to be, unlike the
Baltic Sea. n

[email protected]

February 2025 • Infrastructure Investor 19

 Insight

Projecting through to 2028, with

an AI boom in mind and variations
in scenarios of future equipment
shipments and operational practices,
as well as variations in cooling
energy use, the report estimated
this to rise to anywhere between 6.7
percent and 12 percent of total US
electricity in the next three years.
What’s 255TWh between friends,
right? Which is another way of
saying: the construction of both the
data and energy infrastructure faces
Digital infra Uncertainty shrouds the many unknowns.
One can debate the likelihood of
AI and energy landscape the upper range of 12 percent of US
electricity being consumed by data
centres by 2028, although one is
reminded of what Marc Ganzi, chief
Comment executive of DigitalBridge, told us in
our September podcast.
“The reality is the arc at which AI
Expert comment by Zak Bentley will be built will follow a lot of the
same technicals and fundamentals
on how public cloud was built. Public

I
t may be a new year but don’t cloud will turn 12 years old this year,”
expect the conversations to he said. “We probably have spent in
change too much. 2025 has
followed on where 2024 left off,
with Microsoft president Brad Smith
4.4%
Percentage of US electricity
the order of magnitude of about a
little under $2 trillion building public
cloud, and it’s taken us 12 years to
last month pledging to invest $80 consumed by data centres in 2023, get here. So, there doesn’t need
billion to build new AI-enabled data which could rise to between 6.7% to be this level of hysteria around
and 12% in the next three years, per
centres, more than half of which will the US Department of Energy
building AI infrastructure because it’s
be in the US. going to take a long time.”
Curiously, for a company that in Ganzi’s words perhaps articulate
September was inking plans for a So, back to where 2024 left off. The the state of play better than the
$30 billion AI infrastructure fund US Department of Energy – facing ambivalence of the DOE’s numbers,
with Global Infrastructure Partners, a rejig of priorities when the new but the sentiment remains the same.
a part of BlackRock, Smith’s more administration took office last month In addition to the GIP strategy and
than 3,000-word missive on – released its Report on US Data DigitalBridge, other infrastructure
Microsoft’s AI domination plans Center Energy Use, shortly before managers are tapping into the
did not include much conversation Christmas, alongside the Lawrence dynamics of energy supply and AI,
around the fuel needed to fire up Berkeley National Laboratory, such as KKR, ECP, Brookfield and
such plans. something not done since 2016, Blackstone, to varying degrees of
Of course, the power purchase when data centres consumed about commitment. Both the GPs and their
framework agreement Microsoft 1.8 percent of total US electricity. LPs would do well to remember the
signed with Brookfield Asset uncertainty – infrastructure’s nemesis
Management last May goes some Ambivalent prediction – that the DOE report encapsulates
way towards explaining its wider That had risen somewhat at this point, while embracing the
data centre energy plans, as well as substantially, although not opportunities it presents. n
its revival of part of the Three Mile unexpectedly, to 4.4 percent by
Island nuclear plant in Pennsylvania. the end of 2023, the report stated. [email protected]

20 Infrastructure Investor • February 2025

 Insight

Editor’s letter
New York
530 Fifth Avenue,
14th floor
Going direct isn’t always
straightforward
New York,
NY 10036
T: +1 212 633 1919

London
100 Wood Street
London
EC2V 7AN
T: +44 20 7566 5445

Hong Kong
Kalliope Gourntis
Room 1501-2, Level 15, [email protected]
Nexxus Building,
No. 41 Connaught Road, Central,
Hong Kong
T: +852 3704 4635

D
Infrastructure Investor irect investing has been around for several decades and Canadian pensions
Published 10 times a year by
PEI Group. To find out more about
and Australian superannuation funds have become experts at making the
PEI Group visit pei.group most of the model when it comes to investing in infrastructure.
© PEI Group 2025
The benefits of direct investing are well known – ranging from relying less on
external managers and thus saving on management fees to having greater control
No statement in this magazine is to
be construed as a recommendation
over governance and management of portfolio companies. But some recent
to buy or sell securities. Neither developments that resulted in headaches for some Canadian pensions, combined
this publication nor any part of it
may be reproduced or transmitted
with the fact that infrastructure is continuously evolving and moving further up
in any form or by any means, the risk curve, prompted us to question
electronic or mechanical, including
whether the model is still fit for
photocopying, recording, or
by any information storage or infrastructure’s future. Turn to p. 22 to “ The benefits of
retrieval system, without the prior
permission of the publisher.
find out what we discovered. direct investing
Whilst every effort has been This month we also look at data
made to ensure its accuracy, the
publisher and contributors accept
centres from two perspectives. The first are well known…
no responsibility for the accuracy
of the content in this magazine.
(p. 30) examines the interdependence but some recent
between these assets and AI. You
Readers should also be aware
that external contributors may may be surprised to learn it’s not a developments…
represent firms that may have
an interest in companies and/or
relationship of equals. The second prompted us to
their securities mentioned in their (p. 34) focuses specifically on Malaysia,
contributions herein.
which is transforming into Southeast question whether the
Cancellation policy You can
cancel your subscription at any
Asia’s new major digital hub. model is still fit for
Perhaps less sexy, but nonetheless
time during the first three months
of subscribing and you will worthy of investors’ attention, is waste infrastructure’s
receive a refund of 70 percent
of the total annual subscription
management. Thanks to a diverse value future ”
fee. Thereafter, no refund is chain, investors can access parts of the
available. Any cancellation request sector to suit their risk appetite. Turn to p. 38 to find out how some infrastructure
needs to be sent in writing to
the subscriptions departments GPs are making the most of the opportunities the sector has to offer.
([email protected])
in either our London or
New York offices.

Printed by Stephens & George Ltd

stephensandgeorge.co.uk

Kalliope Gourntis

February 2025 • Infrastructure Investor 21

 Cover story

Is direct investing fit for

22 Infrastructure Investor • February 2025

 Cover story

infrastructure’s future?
While the UK is pushing for pension schemes to be modelled more
closely on their Canadian and Australian counterparts, the more established
direct investors are facing troubles of their own, throwing into question whether
the model is worth replicating. Daniel Kemp and Zak Bentley investigate

February 2025 • infrastructureinvestor.com

EXTRA
Why data
centres’
growth is not
tied to AI

Direct investors’
bumpy ride

Cover
over story

February 2025 • Infrastructure Investor 23

 Cover story

amid a push to diversify their portfolios

R
achel Reeves is not the infrastructure, thanks in large part to
first UK chancellor to call with overseas assets. the GPs that emerged there and which
on its local government AustralianSuper, which declined to rapidly became the largest players in
pension schemes to be- comment for this article, had a cou- the sector globally – Macquarie As-
come direct investors in ple of high-profile direct investments set Management and IFM Investors,
infrastructure, and judg- in private equity and listed equities among several others, including the
ing by the recent speculation around go sour in 2024, with Australian me- now-defunct Hastings Funds Man-
her future, she might not be the last. dia reporting that its telecoms towers agement and AMP Capital. A huge
In a keynote speech in November, business Indara has recorded losses programme of privatisations and asset
however, she was forthright, stating according to documents filed with the recycling by successive Australian gov-
that “more often than not, it is Cana- Australian Securities and Investments ernments also added fuel to the fire.
dian teachers and Australian profes- Commission. The big direct investors Down
sors reaping the rewards of investing This is not to say the model is itself Under are AustralianSuper, Aware
in British productive assets”, declaring responsible for such episodes – but it Super, Cbus and UniSuper, as well as
that “that’s not good enough”. does highlight the potential pitfalls that the state government-backed investors
Indeed, those direct investors have surround what Reeves is aiming to rep- Victoria Funds Management Corpora-
had great joy in building up their port- licate. tion and TCorp in New South Wales,
folios in the UK, US and Canada, as with the likes of Australian Retirement
well as beyond their respective borders The push to go direct Trust, Hesta and Rest also doing direct
tapping into emerging markets. The largest investors’ desire to go di- deals, albeit often alongside an external
The timing of Reeves’ speech was rect is ultimately driven by a belief that manager.
inauspicious. Last year saw turbulent it can lead to higher returns. As such, the portfolios they all built
times for some of the major Canadian It is also driven by the belief that tended to largely comprise core infra-
investors, at least, with OMERS writ- internalising investment management structure assets, with significant expo-
ing off its investment in Thames Wa- will save on external manager fees, sures to electricity and gas utilities and
ter before regulator Ofwat placed the resulting in lower costs overall, which distribution, water, airports and ports.
utility under a Turnaround Oversight is a particular concern to the highly When it comes to digital infrastruc-
Regime. fee-conscious Australian superfunds. ture, telecoms towers have historically
Meanwhile, a week before Reeves’ In addition, going direct gives large been the most prominent investments.
speech, the entire board of the Alberta funds a degree of control over their Over the past several years, though,
Investment Management Corporation investments that they might not other- two things have happened simultane-
was sacked by the state government wise get by deploying through pooled ously: those previously safe-as-houses
amid increased operating costs met by funds or even separately managed regulated assets have occasionally
lower overall returns. accounts. proved not to be quite as bulletproof as
And in December, CDPQ saw three A majority of Canada’s Maple 8 – initially thought, while the wider asset
former executives, including former comprising OMERS, OTPP, CDPQ, class has evolved and begun to move up
managing director of infrastructure for BCI, PSP Investments, AIMCo, CPP the risk-reward spectrum.
Asia-Pacific and the Middle East Cyril Investments and HOOPP – began in- All of this has led to volatility in
Cabanes, charged by US authorities for vesting in infrastructure at the turn returns for some funds, particularly
their participation in an alleged bribery of the century or in the mid-2000s. in Canada, which until recently was
scheme involving Indian conglomer- HOOPP is the exception, having en- unprecedented.
ate Adani Group alongside renewables tered the fray in 2019. These pensions
firm Azure Power, in which CDPQ is either declined to comment for this ‘Risk was underestimated’
the largest shareholder. story or did not respond to requests for Indeed, OTPP for example is believed
Australia’s superannuation funds comment. to have experienced a write-down in
have not been immune either, even as The Australian superfunds were 2023 of its 40 percent holding in Caru-
several of the country’s largest investors also among the first in the world to na, Finland’s largest electricity distri-
set up ofÏces in London and New York deploy capital at scale into unlisted bution company, which it acquired in

24 Infrastructure Investor • February 2025

 Cover story

“The UK, US and Europe might

be deep markets, but there is also
a deep bench of competitors who
are very well resourced, have been
there a long time and are far
better incentivised”
FORMER CIO
An Australian superfund

February 2025 • Infrastructure Investor 25

 Cover story

“The key question I always

ask is: ‘Can you do a better job
than a manager that’s got 50
or 100 people specialising in a
particular sector? And can you
source better assets?’”
KEN LICENCE
Principle Advisory

26 Infrastructure Investor • February 2025

 Cover story

2021, following changes in the coun- ($12.6 billion; €12.1 billion), with a lit- is hugely important, so investors have
try’s regulatory framework. This in tle over half that in direct investments, to ask themselves if they can replicate
part led to its infrastructure return fall- and a further percentage of the port- those skills. In some cases, they won’t
ing from 18.7 percent in 2022 to -2.8 folio classified as ‘semi-direct’ (ie, co- be able to.”
percent in 2023. investments or managed accounts). This is where investors, even the
“When the cycle is at the peak, with Most of it is in Australia, but the very largest, still look to develop stra-
higher inflation, politicians distressed fund has also been making a signifi- tegic partnerships with GPs – to ac-
and regulators not allowing tariff in- cant push into the UK, opening its first cess deals in markets or sectors where
creases in line with inflation, your asset overseas ofÏce in London in late 2023. they may not be best placed to do it
can go practically bankrupt,” says one “The easiest thing for us to do is themselves.
source at a leading placement agent. make direct investments in our own In many cases, the investment it-
“Thames Water is just the tip of the backyard,” Aware Super’s head of infra- self will still be managed in-house, but
iceberg. structure Mark Hector says. “That will the fund will get access to a deal that
“That’s the political cycle of regulat- always be the market that we under- it might not have been able to without
ed assets. I think the risk in regulated stand most from an infra perspective the external relationship – and for the
assets was underestimated, and a lot of and we have certain competitive advan- GP they get an extra source of will-
people bought those assets saying it’s tages here, such as in tax for example. ing capital to allow them to take out
just coupon clipping.” We’re also considered by government bigger-ticket deals.
A former CIO at an Australian su- to be a trusted local owner of sensitive “Direct investment gives us more
perfund, who requested anonymity assets, which can be beneficial for GPs control and allows us to exercise in-
to speak more freely, said the direct looking for an Australian source of fluence over the governance, manage-
investment model makes sense for a capital. ment and strategy of portfolio compa-
fund when it is deploying capital into “But the world is a big place and nies,” explains Kyle Giumelli, senior
relatively low-risk assets in its home our goal is to produce the best possible investment analyst, private markets,
jurisdiction, where it truly understands return for our members. The reality is at UniSuper. “We are open to invest-
the market and can be on top of risk the Australian superannuation system ing directly alongside GPs and have
management more effectively. grows at a faster rate than Australia’s active relationships with a select num-
But going overseas is “absolutely” overall economic growth, so that we ber of ‘smart partners’ – experienced
more difÏcult, this person says. gradually get bigger and bigger – it high-quality institutional investment
“In Australia, going direct is fine – then makes logical sense for us to also managers we work with to access global
we can all do old-school infrastructure deploy capital overseas in order to find dealflow and enhance asset manage-
here, and it becomes a cost-of-capital the best returns.” ment, leveraging our size as well as
shoot-out for a lot of assets. But go- capacity and speed to deploy.
ing into new markets – particularly Managers’ role “Our model allows us to consider the
emerging markets, but even in devel- Where do managers fit into these entire universe of unlisted opportunities
oped economies like the US or the funds’ strategies? – we’re not concerned about labels, so
UK – how do you compete with the Many look to partner with GPs to we can pursue the assets that we think
big managers who have been there for deploy capital into deals, even if they provide the best risk-adjusted returns.”
years? are not able or willing to make com- UniSuper still has a bias for tradi-
“The UK, US and Europe might be mitments to their pooled funds. tional core infrastructure assets, he
deep markets, but there is also a deep “The key question I always ask is: says, but the fund looks at higher-risk
bench of competitors who are very well ‘Can you do a better job than a man- core-plus investments opportunistical-
resourced, have been there a long time ager that’s got 50 or 100 people spe- ly, often investing alongside its afore-
and are far better incentivised.” cialising in a particular sector? And can mentioned “smart partners” depending
Aware Super is one of the most active you source better assets?’” asks Ken on the asset.
direct investors in infrastructure in Aus- Licence, CEO of Sydney-based invest- Hector echoes this: “We could
tralia, to the point where the fund now ment consultant Principle Advisory. theoretically just invest in a bunch of
has no mandate to make new GP com- “You might have a friendly invest- pooled funds and SMAs, but we are so-
mitments in the asset class, instead pur- ment banker who comes to you with phisticated and experienced enough to
suing direct deals alongside occasional, a nice asset wrapped up in string, but make some direct investments on our
more passive co-investments alongside you could be number 43 on their call own, and we also know there’s enough
managers. Its total infrastructure port- list. Are you necessarily getting access dealflow out there for us to work as a
folio sits at just under A$20 billion to the highest-quality deals? Sourcing genuine partner alongside a variety of

February 2025 • Infrastructure Investor 27

 Cover story

different GPs, particularly on some of a lot of people on that side and building money too – this isn’t an LP versus GP
those larger and more complex deals up systems and processes.” conversation. It’s all about what you
where they need equity partners before Hector concurs and says reputation- need to be a successful direct investor.
their pooled fund LP base. al risk is “absolutely paramount”. “Is it a generalist opportunity where
“That means we don’t see a whole “But the fact we are still going down the skill set is sufÏciently available to
bunch of consistent dealflow from each this path means that we’re obviously enable you to competently invest? Or
of these individual GPs – but it’s not prepared to accept that greater level of are you in areas of specialism where
our goal to see every single deal from reputational risk relative to indirect in- you have to ask yourself: do I know
every single manager. We are a tiny vestments for a broader set of benefits,” enough, or can I find the people with
fraction of the total global capital that he says. the right experience to be stewards of
needs to be invested in infrastructure Of course, the direct investment capital and assess investment oppor-
every year – our goal is just to deploy model itself is not necessarily the prob- tunities? We see that more of those
a certain amount each year, in ballpark lem when an investment goes wrong. generalist infrastructure strategies are
terms around a billion dollars per year, In the example of OTPP and Caruna, being managed in-house, even directly,
that’s manageable, and we are confident the fact that a further 40 percent of and then the specialist stuff is embrac-
we can deploy that on a direct basis.” its equity was controlled by a GP like ing partnerships with GPs more.”
On the other side of the world, the KKR perhaps proves this – but it does Andrew Claerhout – a partner at
Investment Management Corpora- raise the question of whether direct Boston Consulting Group who previ-
tion of Ontario has quickly adopted investors are disadvantaged when it ously worked at OTPP for 13 years,
the direct investment model since its comes to addressing issues. serving as its head of infrastructure
establishment in 2016. Head of infra- David Scaysbrook, co-founder and from 2013 until his departure in 2018
structure Matthew Mendes says about managing partner at energy transition – suggests outsourcing asset manage-
55 percent of its infra portfolio is direct and renewables specialist Quinbrook ment in the event things go wrong.
investments, with a target to reach 70 Infrastructure Partners, points out that “Rather than building a large, di-
percent by 2027 – implying there will the private markets investment model, verse asset management team that is
still be a role for GPs. broadly, has been built on the fact that ready to deal with any tricky situation,
“It’s a bit of a stretch to go into investment managers have “skin in the it is generally more effective for inves-
everything by yourself and that’s cer- game” – which direct investment pro- tors to build value-creation teams that
tainly not the way we’ve tried to ap- fessionals at LPs, who usually do not focus on identifying the work to be
proach building out our portfolio,” he earn carry and are subject to lower bo- done and leveraging outside experts to
says. “Funds will continue to be a really nuses, do not have in the same way. do the heavy lifting,” Claerhout argues.
important part of our portfolio. They “Does that make a difference?” asks “This way, they can bring the best
can access things that we can’t, they Scaysbrook. “Well, fund managers lose possible talent to bear while converting
add diversification, they add skill sets
and jurisdictional knowledge that we
won’t have.” Canada’s Maple 8* volatility (net IRR %)
OMERS CPP Investments BCI AIMCo
OTPP CDPQ PSP Investments
Tackling problems
20
Of course, some investments do still
go awry. For example, IMCO saw a
$400 million investment – partially 15
made through its infrastructure alloca-
tion – in Swedish battery manufacturer
10
Northvolt upturned recently, when it
fell into administration in November.
“We try to be humble, introspective 5
and learn. We take our wins seriously,
we take our losses seriously,” Mendes 0
says. “We think governance is really
critical and is one of the cornerstones
of investing on a direct basis. We are -5
2019 2020 2021 2022 2023 2024
really spending time enhancing our as- CPP, BCI and PSP report for fiscal years. *Excluding HOOPP which launched its infra strategy in 2019
set management capabilities and hiring Sources: Investors’ annual reports

28 Infrastructure Investor • February 2025

 Cover story

investment team, as well as the infra-

“Direct investment structure team, to make sure we’ve
got the capability and confidence to
do direct deals. Once you become

gives us more control a sole or majority investor in an as-

set, you do have a greater level of re-
sponsibility, and that’s not lost on us,”

and... influence over he says.

A partner at a prominent GP raising
one of the largest infrastructure funds
in market today says they are starting
the governance... of to see some institutional investors, who
in the recent past have been explicit in
their desire not to make fund invest-
portfolio companies” ments, turn back towards pooled com-
mitments.
KYLE GIUMELLI
“They’re looking to be on the front
UniSuper edge of that definition of infrastruc-
ture,” this source says. “We openly say
to our investors that, probably once or
twice within each vintage, there is a
new, redefined type of asset within in-
frastructure. These investors still want
to push themselves into that frontier
of true value-add infrastructure, which
they would not be able to access on
their own.
“It’s clear that for some funds who
have positioned themselves as going
direct, things haven’t necessarily played
out as well as they would have thought,
especially on a peer-to-peer compari-
son basis.”
And as Principle Advisory’s Licence
says of the Australian superfunds:
a fixed cost into a variable cost. Rather lot of asset classes – but it [all depends] “They are the new mutuals – they act
than having a fire department ready to on how the funds are merged and how like big banks in many ways and they’re
be deployed when needed, it is more their governance works. going to have all the issues associated
effective to have a fire alarm with the “Mergers of equals have not often with those same financial services in-
ability to work hand-in-glove with ex- worked well at all in Australia. So, it all stitutions. So they will have painful in-
ternal experts to add or preserve val- comes down to ensuring you have the vestments from time to time – but it’s
ue.” right expertise, and therefore the right cyclical.”
This helps get around the ever- investment committee making deci- That lens can certainly be applied to
present difÏculty of trying to build sions, rather than being aligned with the Maple 8 as well, which participate
an internal team when faced with the any unions or government pledges that in financial markets in similar ways.
compensation on offer from GPs. could prompt them to make decisions It also underscores the fact that
in the best interest of stakeholders over while the direct investor model has a
Greater control, greater their members.” lot to offer – ability to put larger licks
responsibility Hector says Aware Super has been of capital to work at once, having great-
As for creating pension funds that are on a journey for several years to reach er control over investments and saving
big enough to deploy capital at scale the point it has today. on external manager fees – it still will
and direct, the former superfund CIO “We’ve worked to build out all our not be without challenges, and it cer-
points out that: “Bigger is better in a support teams within and outside the tainly won’t be all plain sailing. n

February 2025 • Infrastructure Investor 29

 Analysis

Artificial intelligence
only a ‘sweetener’ for
data centre sector
Throughout 2024 it was virtually impossible to discuss data centres
without mentioning AI. But while AI needs data centres for expansion,
the reverse may not be strictly true, Justin McGown finds

S
peaking on a panel at the structured finance Quynh Tran noted “That is just construction financing;
Infrastructure Investor that of the $31 billion in construction not acquisition financing, not revolv-
Americas Forum last De- financing for data centres the bank had ers,” she said, referring to the above
cember, Sumitomo Mit- issued since March 2022, 70 percent figure. “But the more interesting fact is
sui Banking Corporation’s was between January and November that 70 percent of that has been in 2024
deputy head of American of 2024. and a lot of that has been driven by AI.”

30 Infrastructure Investor • February 2025

 Analysis

colliding and we’re starting to see the

digital world really have a hard time
accessing the conventional power
system.”
Described to Infrastructure Investor
by experts as essentially “reverse power
plants”, these vital pieces of infrastruc-
ture are increasingly turning to novel
solutions to meet their growing energy
needs, and revealing unforeseen ten-
sions in the process.
Hyperscalers with decarbonisation
goals are finding those at odds with
securing cheap, reliable energy. At the
same time, data centre developments
are beginning to encounter local push-
back from communities concerned
about the environmental impact, par-
ticularly from AI facilities.
Understanding the forces that shape
data centres as a sector requires looking
beyond the hyperscaler hype.

Electricity, land and data

All data centres need land, access to
data transmission capacity and energy.
She also recalled that the first data The type of data centre determines
centre SMBC was party to in 2008 set which factor takes precedence. Centres
a record at 25MW of capacity, a far cry
“We’re protecting powering cloud computing need low
from recent deals involving centres of latency, which drew many to Northern
up to 300MW.
our capital and our Virginia in the US and its easy access
“Clearly, data centres have taken a exposure to technology to nationwide fibre-optic networks.
lot of the limelight, and specifically hy- AI-focused centres have a higher tol-
perscaler data centres have really tak- changes by getting erance for latency, but variable energy
en off,” Matthew Mendes, managing demands thus making electricity the
director and head of infrastructure in- long-term contracted chief concern.
vestment at Canadian pension IMCO, Attracting staff to maintain the fa-
tells Infrastructure Investor. revenue with AAA cilities is also an important considera-
He notes that roughly 30 percent of tion which precludes some options. A
the LP’s C$10.06 billion ($7.02 billion;
credit worthy site in the Arctic Circle might save on
€6.79 billion) infrastructure portfolio is cooling costs, but it makes recruiting
classed as digital infrastructure.
counterparties” difÏcult.
“From our perspective that is really Ultimately, consistent access to
JOHN LUCAS
quite exciting,” Mendes adds, although large amounts of electricity at as
Quinbrook Infrastructure Partners
the spike in demand also posed chal- low a price as possible is the single
lenges. most important factor to determine
“We’ve been thinking about how the long-term profitability of a data
to make sure the portfolio is truly di- centre.
versified, but at the same time making While hyperscalers are pursuing
sure that we’re investing in our core entire campuses of data centres with
principles, such as the clean ener- up to 1GW in capacity primarily for
gy transition. Those two worlds are AI, the entire industry is motivated by

February 2025 • Infrastructure Investor 31

 Analysis

increasing demand for data and ease of and gives rise to a very heavy rack that
“The reality is that
access. might weigh thousands of pounds.” despite [increasing
Grice notes that the more dense-
Digital footprints ly packed chips or processors are, the efÏciencies] the
“I bought a new car that has a 360-de- more advanced cooling systems that
gree camera with a connected service rely on liquids become attractive to consumption of data is
linked to all sorts of sensors,” Chris manage heat. Heavy pumps and pipes
Pyke, chief innovation ofÏcer at GRESB full of liquid coolant in turn produce on a one-way path –
tells us. “I just probably upped my data new engineering challenges in design-
footprint by a factor of 100 by upgrad- ing the structure itself rather than the up and to the right”
ing a10-year old car to a new one. And computers within.
every day someone else like me is doing This is partially why hyperscalers are SEAN KLIMCZAK
the same thing, and it’s not like anybody pursuing 1GW “campuses” rather than Blackstone

is rolling their data footprint back. bigger stand-alone data centres. A clus-
“Whether it’s your Ring doorbell, ter of similar buildings, able to share
your connected refrigerator, or your access to the same energy sources and
phone, every time you add one of those data hookups, is significantly simpler to
wingdings to your life you pretty much design than a single building, even if a
pay a permanent increase in your data campus requires more land overall.
footprint,” Pyke says. Campuses also yield energy efÏ- have been cited as the impetus for the
Growing data footprints are not just ciency advantages, an increasingly vital renewed interest in nuclear reactors,
a “first world problem”. While demand consideration, particularly in the US, including Microsoft’s efforts to recom-
is growing fastest in developed coun- where improving efÏciency previous- mission Three Mile Island in Pennsyl-
tries, people in the developing world ly allowed for a frictionless expansion vania, the fact remains that data centres
can cast a digital shadow even before without spiking energy demand. Now, themselves are in increasing demand
they have 24-hour access to electricity American industry is using an increas- regardless of the specific purpose. That
thanks to cell networks and lightweight ing amount of electricity, while climate demand is already able to alter energy
mobile applications. change is driving increased use of pow- markets and even strain local power
Digital banking and mobile money, er for heating and cooling, and vehicle grids.
which requires only a feature phone on electrification all compete for the same Deputy editor and science outreach
some networks, has exploded in pop- pool of energy, changing the shape of a head at Our World in Data, Hannah
ularity. According to the World Bank, market data centres rely upon. Ritchie, drew from International Ener-
between 2022 and 2023 more than 400 gy Agency data on her blog Sustaina-
million people in sub-Saharan Africa The bottleneck bility by Numbers to reveal a surprising
cast digital shadows as registered us- “Power demand is growing after being figure: “Between 2010 and 2018, global
ers on mobile money platforms, mak- close to flat for decades,” LS Power data centre compute increased by more
ing digital infrastructure a vital part of COO Darpan Kapadia comments. He than 550 percent. Yet energy use in
their daily lives. expects that growth trajectory to be du- data centres increased by just 6 percent.
rable, an assertion backed by the latest “You might wonder how these esti-
Design challenges data. mates can be so low when the demand
The rising demand for energy from A recent report from the US De- for AI itself is booming,” Ritchie wrote.
data centres comes in part from the fact partment of Energy found that data “The efÏciency of data centres has also
that their current designs might be as centres consumed 4.4 percent of total been improving rapidly. The energy
dense as is practically possible with cur- US electricity in 2023. That translates intensity of these chips is less than 1
rent technology and engineering. to 176TWh, a sharp increase from 58 percent of what it was in 2008.”
“How much density is too much TWh in 2014. By 2028, that same re-
density?” is the question James Grice, port estimates that data centres could Up and to the right
a partner at Akerman LLP, poses when consume anywhere between 325- Some are counting on those efÏciency
asked about future developments in 580TWh. gains to uphold current trends.
data centre technology. “If we go to While AI applications are driving “We have high confidence that AI,
300KW on a rack, that is enormous a large portion of that demand and and cloud equipment and software will

32 Infrastructure Investor • February 2025

 Analysis

Though consumer internet use has increased significantly in recent years, consistently improving
data centre efficiency made it easy to accommodate until now
Average Global Monthly Average PUE in US data centers
IP Traffic (Exabytes) developments in photonic hardware
400 2
could replace electricity in wires with
light in fibre optics. Both technologies
350
could alter the geopolitics of chip pro-
duction and upend data centre design.
300 “We are not spec building anything
specifically for that reason,” John Lu-
250 2 cas, a managing director and head of
the US investment team at Quinbrook
Infrastructure Partners tells Infrastruc-
200
ture Investor while discussing Quinbro-
ok’s approach to minimising exposure
150 to disruptive new technology.
“We’re not in a position to take on
100 1
that technology risk and worry if that is
2017 2018 2019 2020 2021 2022 2007 2014 2019 2021 2023 going to become obsolete by the time
Source: Electric Power Research Insitute you run out of the lease.”
Lucas explains that Quinbrook
plans on data centres lasting 30 years,
become more efÏcient with every pass- evangelists, they all need an environ- which means ensuring both durability
ing year,” Sean Klimczak, Blackstone’s ment in which to put the compute. and adaptability. “We’re working to
global head of infrastructure tells Infra- Even if it’s quantum compute or organ- our tenants’ specifications, and if there
structure Investor. “But, the reality is that ic storage, it still needs a protected, safe, needs to be changes over time, that’s
despite those efÏciencies, the consump- connected and stable environment.” something that we work through in
tion of data is on a one-way path – up Mauck believes that even funda- addition to the existing contract that
and to the right. From our perspective, mental technological changes will ul- we have in place. We’re protecting our
history is a good indicator of the future timately be incremental. The need for capital and our exposure to technology
here,” Klimczak says, emphasising that the services will only continue to grow changes by getting long-term contract-
AI is only part of what is driving the and existing centres will likely be oper- ed revenue with AAA credit worthy
current boom in data centre construc- ated as long as possible. counterparties.”
tion. “I look at the fact that the amount “We saw the virtualization of serv-
of data produced in any given year is up ers, we’ve seen the migration to GPUs, With or without AI
roughly 100x over the past 15 years or all of these incremental things,” Mauck AI has drawn a significant amount of
so as we’ve gone from cloud computing says. “All of them are driving new industry attention, and hyperscalers are
to social media and video.” demand for data centres even if the exerting influence on related infrastruc-
The sector is poised for continu- configuration has changed, so I’m not ture sectors like electricity and water,
ous improvement in energy efÏciency worried about those from a defensive but while it is inarguably a powerful ac-
alongside demand for data capacity, standpoint. celerant to data centre growth, there is
but the changes in technology can also “I think what’s really interesting strong evidence that a more staid digital
bring disruption. is the network technology, which will infrastructure sector would reach cur-
start to let us do things further apart rent heights over time even without it.
De-risking advancement and which will give us new markets to As long as the internet continues
“I don’t ever want to fight the technol- expand into.” to grow, people increasingly rely upon
ogy curve,” says Jon Mauck, a senior While conventional chip designs it for the daily functions of their lives,
managing director at DigitalBridge. continue to steadily improve, there are and data ranging from e-mails to cat
“What I’m focused on providing is new technologies on the horizon that photos continues to pile up and need
the environment where the compute could render current data centres out- storage, the expansion of data centres
happens and where the information is moded. is inevitable as they solidify into un-
stored. Advancements in quantum comput- glamorous but vital pieces of infra-
“Even when I have conversations ing have brought the technology closer structure that the modern world rests
with the most far-reaching technology to practical applications, while recent upon. n

February 2025 • Infrastructure Investor 33

 Analysis

Malaysia transforms into

a data centre powerhouse
As Singapore’s data centre expansion slows, investors are turning to Malaysia,
where rapid development and government incentives are positioning the country
as Southeast Asia’s next major digital hub, Tom Taylor writes

34 Infrastructure Investor • February 2025

 Analysis

n the space of just a few years, Ma- Singapore, by contrast, had 985MW

I
This decline came before a surge in
laysia has gone from a minnow in the in operation, but a much thinner pipe- demand brought on by the rapid de-
data centre industry to one of its fast- line of 54MW under construction and velopment of artificial intelligence in
est growing markets. 295MW planned. the wake of OpenAI’s November 2022
With Singapore’s data centre “Johor came from nowhere and is launch of ChatGPT.
growth slowing to a standstill around now the talk of the town,” says Thomas Although Singapore ended its mor-
the turn of the decade, many inves- Liu, head of greater China and Asia atorium in 2022, it released just 80MW
tors have shifted their gaze across the data centres, real estate, Actis. In 2023, of new capacity in 2023, with four pro-
short causeway into the Malaysian state through its data centre platform Ep- viders – AirTrunk-ByteDance, Equinix,
of Johor, which looks set to overtake och Digital, Actis secured land for its GDS and Microsoft – chosen based on
its neighbour’s capacity in a matter of 120MW data centre under develop- criteria including energy efÏciency.
years. ment in the state capital Johor Bahru. “Even for the cloud players, Singa-
Malaysian prime minister Anwar Liu says Actis’s interest in Malaysia pore just didn’t have enough capacity
Ibrahim wants his country to become began with an observation that Singa- to let them grow, and so they need-
a leading hub for generative artificial pore’s growth was waning. ed to look at other alternatives,” Liu
intelligence and has implemented pol- says.
icies to make the emerging market an “People started looking at both Jo-

$16,693
attractive proposition for investors. hor and Batam [Indonesia], and until
While investors say Johor’s data about two years ago there was a debate
centre industry has a lot of growth po- whether it will be Batam or Johor. But
tential, some caution that newcomers clearly, by now, Johor has proven to be
Price of real estate per sq m in
may face delays as the prerequisite in- Singapore compared with Malaysia’s the natural destination.”
frastructure plays catch-up. average rate of $2,398 per sq m
Yet a cooling in Malaysia’s data cen- The ‘greater Singapore concept’
tre rollout could result in a more sus- Seraya Partners chief investment ofÏcer
tainable industry in the long term and James Chern sees the state of Johor as
create opportunities for investment in such a natural fit for expansion that he
“Even for the cloud
adjacent infrastructure, like renewable refers to the encompassing region as
energy. players, Singapore just “the greater Singapore concept”.
Chern says Singapore is the “heart”
Data limits didn’t have enough of a growing Southeast Asia and says
Johor appeared on investors’ radar af- Malaysia will play a crucial role in pro-
ter the Singaporean government, con- capacity to let them viding the city-state’s data needs.
cerned about the power consumption “Singapore imports water from Ma-
of its data centres, imposed a moratori- grow, and so they laysia; our food comes from Malaysia;
um on new development in 2019. talent comes from Malaysia,” Chern
Data centres account for about 7
needed to look at says. “Singapore and Malaysia are such
percent of Singapore’s electricity con- close neighbours, where there’s such
other alternatives”
sumption, according to the Ministry strong historical linkages across all in-
of Trade and Industry; globally, the dustries, supply chains and value chains,
THOMAS LIU
figure is about 1 percent, according to so what’s happening with the data cen-
Actis
the International Energy Agency (al- tre industry is really just an extension of
though this figure could rise in years that.”
to come). The concept of a greater Singapore
Since the start of the decade, a flurry region is not unique to Seraya; War-
of development saw Johor’s operational burg Pincus-backed Princeton Digital
capacity grow to 231MW by H1 2024, Group has also created an ‘SG+’ strat-
with a further 434MW under construc- egy to cover Singapore, Batam and
tion and 1,232MW planned, according Johor.
to commercial real estate service pro- Seraya established its data centre
vider Cushman & Wakefield. platform Empyrion Digital in 2021

February 2025 • Infrastructure Investor 35

 Analysis

and, while Singapore’s moratorium on Edge raised more than $1.6 billion in
new development was still in place, equity and debt to expand its data cen-
launched itself into business by acquir-
“Singapore and tre portfolio across Asia, including into
ing the 12.5MW SG1 Dodid DC. Malaysia.
Malaysia are such close
In the succeeding years, Chern says “It allows us to keep expanding and
data centres have “exploded” in size neighbours, where building out capacity in our existing
due to AI’s high demands on computa- campuses,” says Stonepeak senior man-
tional power. there’s such strong aging director Andrew Thomas.
Across the state of Johor, Empyrion “But then it also allows us to pursue
is planning to deliver about 200MW historical linkages new markets, and Malaysia is one of
over the next two years. those for us.”
Luckily, Chern says, Malaysia has across all industries… Although Digital Edge is headquar-
plenty of land – and that land comes tered in Singapore, it has not pursued
at a fraction of the cost of Singapore’s,
so what’s happening data centres on the island, opting in-
at about $2,398 per square metre com- stead to develop capacity across Japan,
with the data centre
pared to Singapore’s $16,693 as of Jan- South Korea, Indonesia, India, the
uary 2025, according to Global Prop- industry is really just Philippines and China.
erty Guide. Thomas says Digital Edge aims to
“Malaysia has certain advantag- an extension of that” establish itself in locations where it can
es: power prices are cheaper, it has become a market leader, and Singa-
abundant talent and land, and plen- JAMES CHERN
pore’s limited growth prospects would
ty of water resources. Being close Seraya Partners make this hard to achieve, whereas
to Singapore, it is a backyard that Johor has a better outlook in terms of
will benefit a lot from Southeast power and land availability, as well as
Asia’s digitalisation of countries and a strong interest from hyperscale cus-
economies.” tomers.
Chern expects Malaysia’s data cen- “The way that these hyperscale
tre industry could grow to about 10 markets develop is you have a couple
times its current size and says every- of early-mover customers, and then
one – including Seraya’s competitors – at some point, if you get a critical
stands to benefit. Seraya itself is target- mass of them, it firmly establishes a
ing returns north of 20 percent from hub.
its data centre assets. “It is a sector that “That’s what has happened [in Jo-
is frankly hard to lose money in at this hor] – it started with some of the larger
point.” Chinese internet companies that took
down meaningful amounts of capac-
The hyperscale boom ity; now, the US hyperscalers are also
That may seem a bullish statement, but entering into this market, so it has be-
a wider confidence in the sector is evi- come the fastest-growing hyperscale
dent in recent investments. market across APAC.”
In December 2024, alternative as-
set manager Blackstone and Canadian Growing pains
pension CPP Investments acquired With such a rapid growth trajectory,
Asia-Pacific hyperscale data centre how much room remains for invest-
company AirTrunk for A$24 billion ment?
($15 billion; €14 billion) – the world’s Quite a lot, according to Thomas, as
largest-ever data centre deal. hyperscale customers who have already
AirTrunk opened its first data centre established a presence in the state of
in Johor Bahru, the 150MW AirTrunk Johor look to double down and add ex-
JHB1, in July 2024, about a month be- tra capacity.
fore the announcement of the deal. “You’ve seen that [with Tier 1 mar-
More recently, in January 2025, kets] in the US and Europe, where
Stonepeak portfolio company Digital even though they’re already established

36 Infrastructure Investor • February 2025

 Analysis

Data centre capacity across Asia-Pacific markets (MW) basic facilities need to be there: the
electricity, the connectivity, the wa-
In operation Under construction Planned
ter supply – they need to be there
0 500 1,000 1,500 2,000 2,500 3,000
first.”
Actis’s Liu says Epoch Digital was
Greater Tokyo “lucky” to secure power for its Johor
Bahru site where its neighbours could
not. “Of all the sites in our area… we’re
Singapore
the only one who has secured power
to be delivered this year – most other
Sydney
sites are dependent on a new substation
which the utilities have promised will
Mumbai be delivered by 2027.”
Liu says developers are unlikely to
Hong Kong start construction without securing
power and water, and many who have
already acquired sites in Johor will face
Greater Seoul
delays on this front.
He says the same scenario has
Greater Jakarta played out across established data cen-
tre markets like Hong Kong and Seoul,
Johor where utilities are playing catch-up to
supply the industry with their power
needs.
Indicators are based on operational Hyperscale Cloud, Colo, Edge & Telco
data centre facilities in the market and excludes Captive & ICT “This is not new, but Johor is a new
Source: Cushman & Wakefield market – it just happened so quickly. It
went from zero to 100 and now they’re
markets, the amount of incremental investors “jumping into the trend” of saying, ‘Wait a minute, we’re going to
absorption of capacity is higher than data centres to gain a first-mover ad- get to 1GW’.”
anywhere else.” vantage. Malaysia has introduced a Green
Indeed, the US state of Virginia, the He says the new guidelines should Lane Pathway which aims to cut elec-
largest market in the world, also has the ensure the data centre industry grows tricity connection times from four
largest development pipeline. in a sustainable way. years down to one.
Yet Seraya’s Chern cautions that big “Data centres require a lot of ener- While this mechanism seems to
tech customers are highly selective in gy, and of course there are benefits to have worked for AirTrunk’s JHB1 –
the data centre operators they work it, but at the same time, if a country which opened just 18 months after
with and says the AI boom may have fails to properly regulate it, that may AirTrunk announced its entry into
only delayed a “reckoning” in the form actually cause a regulation risk.” Malaysia – its effectiveness through-
of consolidation. HHQ partner Khai Yi Lo says the out the wider industry remains to be
“The rising tide lifts a lot of boats, incentives offered by the Malaysian demonstrated.
so for now, everybody’s benefiting, but government – including special tax In the meantime, Ong says, inves-
very soon, when the tide goes away, rates of 0-10 percent for up to 10 years tors could stand to benefit from adja-
you’ll see who’s naked.” for companies involved in digitalisa- cent opportunities, such as in the re-
Early investors in Malaysia’s data tion technology – more than outweigh newable energy required to meet data
centres have also benefited from a any additional regulatory obligations. centres’ ESG requirements.
more relaxed regulatory environment, Johor’s attractiveness has led to “Data centres are consuming en-
whereas newcomers must adhere to a some of the initial areas designated for ergy in a way that Malaysia has never
stricter framework recently laid out by data centre development becoming sat- imagined before, so we are seeing a lot
the Malaysian Investment Develop- urated. of investments coming, whether in the
ment Authority. Lo says while new areas have been form of hydrogen, solar, or wind ener-
Johnson Ong, head of the technolo- earmarked for development, it may gy,” Ong says. “These two industries
gy practice group at Malaysian law firm take some time for additional capac- will see mutual benefit and grow hand
Halim Hong & Quek, says he has seen ity to come online. “The underlying in hand.” n

February 2025 • Infrastructure Investor 37

 Analysis

From waste
to steady income
Europe’s infrastructure GPs are increasingly embracing the opportunities in
waste management. And the sector’s diversified value chain allows them to choose the
risk-return profile that is right for them, Anne-Louise Stranne Petersen writes

T
here is value in waste, and “The waste sector is something that Collection
recent examples support not a lot of GPs have experience invest- European waste management is cur-
that statement. In late ing in… It’s quite niche,” says Martin rently undergoing a transition, ac-
November, Macquarie Sichelkow, partner and co-head of in- cording to Stefan Weis, partner in
launched a £700 million frastructure at Eurazeo. charge of transport and environment at
($855 million; €830 mil- It is also quite a diverse sector. The Luxembourg-based Cube Infrastruc-
lion) bid for waste-to-product company diversification begins in the value chain ture Managers. Old family businesses
Renewi, declaring itself ready to pay a of collection, sorting and treatment, are coming up for sale or need capital
57 percent premium on the share price. where waste is discussed in the parlance to engage with the increased ambitions
In January, Reuters and Bloomberg of other kinds of harvesting of resourc- for recycling and electrification, while
reported that KKR is considering sell- es – upstream, midstream and down- large players are shaving off more mun-
ing Viridor, a UK recycling and waste stream. Further diversification follows dane parts of their offering.
management company, for £7 billion. the source: municipal, commercial and/ Through Cube Infrastructure Fund
That’s a significant improvement on or special waste, and those categories III, the GP is invested in Verdis, a Nor-
the company’s £4.3 billion enterprise can all be biological or non-biological. dic municipal waste collection platform
value back when KKR acquired it in Particular to waste management is with operations across Denmark, Nor-
2020. an often-heightened level of reputa- way, Sweden and Finland; and in Sepur,
While the general need to increase tional risk, as anything that introduces the largest pure-play municipal waste
the levels of reuse and recycling is notions of disgust tends to taint the collection operator in France.
indisputable, the waste sector is less names of those involved beyond rea- Acquired in 2023 and 2022, respec-
standardised than most infrastructure son. The handling and treatment of tively, the availability of these invest-
verticals, and the investments are not polluted soil, household or industrial ments was improved by the market
easily collated into platforms, a fa- biowaste is particularly sensitive to this evolving away from the global players.
voured strategy of infrastructure in- kind of risk, but dispose of any kind of “Some of [the global players] want to
vestors. Hence, many GPs are yet to waste illegally or suboptimally at your withdraw a bit or de-emphasise what
embrace the circular economy. peril. they consider boring municipal waste

38 Infrastructure Investor • February 2025

 Analysis

collection to get into the more sexy, Sorting

complex treatment,” says Weis. The concerted move away from
“This is part of how we got into the
“We don’t take landfills provides new opportunities.
Nordics. The seller wanted to empha- technology risk. We’re Waste-to-energy plants are multiply-
sise the treatment side of things and ing, but the ambitions and potential for
hence get out of more pure-play col- placed in the sorting of recycling are also increasing. “For in-
lection.” cineration, a nice mix burns very nicely.
For the moment, Cube is engaging the value chain, which But once you’re more sophisticated,
with the upstream side of things, look- you have an increasingly separate col-
ing for strong barriers to entry and a is based on mostly lection, meaning more capital intensi-
way to utilise existing expertise in the ty and more circuits of collection, so
team. “We focus on municipal waste automated infrared there is significant growth within the
collection, using knowledge acquired tendered contracts,” says Weis.
from public transport where we’ve
scanner technology This separate collection will allow
invested in fully contracted, availabili- that’s been around for more sophisticated waste manage-
ty-based businesses with the same com- ment, and this is where Eurazeo comes
bination of asset and labour intensity as for decades” in. While in former roles at Margue-
in waste collection,” says Weis. rite, another Luxembourg-based infra-
Ambroise Bayen, who leads Cube’s structure fund manager, Eurazeo’s in-
MARTIN SICHELKOW
waste strategy alongside Weis, adds: Eurazeo vestment team participated in Europe’s
“What we like about waste is the es- move from landfill to incineration. But
sential nature of it. It has political times are changing.
support; there’s regular charging of “When we thought about setting
citizens. There’s some volume expo- up the Transition Fund, we focused on
sure in France, but household waste is where the market was going in terms
very resilient. There is no credit risk as of mega-trends. We saw that circular
the counterparty is the public sector; economy was a big theme in gener-
any issue will be highly visible; and we al, and waste being an inherent part
don’t see a big reputational risk when of that,” says Eurazeo’s Sichelkow. In
[the collection] is done very well.” particular, plastic recycling was ripe for
Strikes happen, but mostly in large investment.
state- or municipality-owned com- Enter Quantafuel, a Norway-based
panies, he says. “Our businesses have chemical recycling business which is –
more of a family culture”. since early 2024 – ultimately owned by
Despite having two waste manage- KKR’s Global Infrastructure Investors
ment businesses, Bayen insists that this III and Global Impact Fund through
is not the beginning of a platform: “The the Viridor waste platform. Quantafu-
local management teams are quite em- el’s business is to upgrade plastic waste
powered, and we bring them together by using pyrolysis and chemical treat-
for a summit once a year to synergise... ment to turn the waste into oils that
But we don’t create European interna- can be used to produce new plastic.
tional overheads, so they are very lean The first step is to get the raw ma-
and competitive. terial, which is why Quantafuel entered
“We are a serial investor in our sec- into a 50:50 joint venture with Eurazeo’s
tor, and that makes us quite interesting Transition Infrastructure Fund for the
to talk to as an alternative to a consoli- development and running of the state-
dator from the sector.” of-the-art ReSource Denmark plastic

February 2025 • Infrastructure Investor 39

 Analysis

waste sorting plant. “Quantafuel needs are avoiding a couple of topics in those model locally and the opportunity
quality feedstock… We came in basical- sectors. There’s commodity pricing risk to become a leader in the harzardous
ly at FID, so at the very beginning of when you have oil derivatives as output, waste management industry. “Barriers
construction. We came in when all the and as a lower mid-market fund, we to entry are even higher for hazardous
permits were in place,” says Sichelkow. don’t want powerful counterparties.” waste and switching costs are high. Per-
What made Denmark a good place mitting can take years,” Ruijs remarks.
for sorting plastic is a penchant for in- Treatment What’s more, “there is a long-term
cineration that has left the country be- While the risk involved in plastic re- robust track record of revenue growth
hind the curve on recycling plastic now cycling would likely involve counter- at sustained attractive margins, and the
that the EU’s Extended Producer Re- parties, technology or mismanagement management is diversifying the busi-
sponsibility (EPR) regulations require rather than outright pollution, the ness and making zero concessions on
producers to manage their products handling of hazardous industrial waste safety”, he notes.
throughout their life cycle. “That’s one has all the hallmarks of something that Generally, CVC DIF is sector ag-
of the fundamental reasons we made could turn toxic by accident. Yet, man- nostic as long as there is a steady rev-
the investment,” says Sichelkow. “Un- aged with care, this part of the value enue model. The firm also appreciates
til now, we’ve been contracting directly chain has also found favour with infra- less specialised solutions too, being
with the municipalities. From October, structure investors. invested in the largest waste-to-energy
we will be dealing with two or three CVC DIF is one such manager, facility in Ireland. Here, a 45-year PPP
collective nonprofit EPRs.” having recently acquired a 49.9 percent concession and guaranteed waste flows
The plant is scaled to exclude new stake in Singaporean hazardous indus- are in place.
sizeable entrants into the Danish mar- trial waste specialist Eco from majority Ruijs won’t rule out other acqui-
ket as it can sort 160,000 tons of plastic owner Séché Environnement. sitions in the waste sector. “Someone
per year, which is practically all available “There is always risk,” acknowledg- needs to deal with the circular waste
plastic waste in the country. The sorted es Allard Ruijs, CVC DIF’s chief in- and ensure minimal impact on the en-
plastic is to be passed on to mechanical vestment ofÏcer. “For us, on balance, it vironment. That is what we appreciate
and chemical recyclers downstream. was an attractive risk/return.” in that kind of business.”
“Mechanical recycling turns the Key to the decision to buy was the As more private capital looks to cap-
plastic into pellets and requires a cer- difÏculty of replicating the business italise on waste, and with little chance
tain level of homogeneity and purity of of the need for waste management
the plastic. Chemical recycling, which dwindling, the Eco deal was the result
our JV partner does, can take more of an extensive search, says Ruijs. “We
complicated plastics, so they’re one of “There’s commodity looked everywhere, and, in many plac-
several different options downstream es, pricing was above valuation, but this
that we have,” Sichelkow explains. pricing risk when you deal was attractive. Also, we are work-
However, the actual plastic waste-to- ing with a strategic partner… Eco is a
oil process is strictly not Eurazeo’s busi-
have oil derivatives as nice addition to the portfolio.”
ness, he says: “We don’t take technology CVC DIF and Cube are invested
output, and as a lower
risk. We’re placed in the sorting of the in more than one waste management
value chain, which is based on mostly mid-market fund we business, and so is Eurazeo. Outside of
automated infrared scanner technology ReSource Denmark, Eurazeo’s Tran-
that’s been around for decades.” don’t want powerful sition Infrastructure Fund is majority
Eurazeo is not alone in shying away shareholder in French 2BSI, which
from taking this next step. Cube’s Weis counterparties” recovers concrete poles and sleepers as
is also not seeing this kind of treatment well as hazardous wood and bio-waste,
as a natural course for expansion. STEFAN WEIS via its BME division. Clearly, once GPs
“Our businesses are increasingly en- Cube Infrastructure Managers get a taste of this sector, they come
gaging in elements of treatment, but we back for more. n

40 Infrastructure Investor • February 2025

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 Analysis

W
hen it comes to through solar, wind and battery invest- also recognising the nuances that
the transition ments, others need different strategies make effective green finance context
to a low-carbon that reflect local resources, infrastruc- dependent. The challenge is not sim-
global econo- ture maturity and public health pri- ply to invest in “green” systems but to
my, countries orities. These differences can create drive transitions that make sense for
might be tak- counterintuitive risks and opportu- each market.
ing the same exam, but often, they are all nities that require investors to have a
answering very different questions. The fundamental understanding of the un- Picking the right horse
pace, approach and context-specific derlying market dynamics. There are often inherent regional char-
nature of national transitions differ sig- Becoming “greener” is a complex acteristics that may drive a country’s
nificantly across regions, meaning that and varied journey shaped by each approach to the transition. For exam-
despite the global challenge, countries region’s unique conditions, from geo- ple, a country with plentiful land with
require different solutions. graphical factors to political will. For low ecological sensitivity and consist-
While some economies can move investors, this means moving beyond ent sun exposure would be well placed
swiftly towards net-zero targets rigid sustainability frameworks while to benefit from solar fields, while this
solution would be less cost-effective in
areas deficient in these factors. But the
transition is also a journey and it’s im-
portant to recognise that countries are
at different stages of this process.
The UK’s last coal-fired pow-
er station ceased operation in Sep-
tember 2024. The country was able
to achieve this milestone due to its
well-integrated clean power infra-
structure. In fact, the move came soon
after a three-month period in which

There are several over half of the UK’s power was gen-
erated via renewable sources. But for
many countries, particularly those

paths to achieving the more recently industrialised and earli-

er in their energy transition than the
UK, ceasing coal-power generation

global transition could cripple economic development.

Green capital applications must
be tailored to each country’s specific
needs to drive meaningful progress.
However, where there is dispersion
there is an opportunity for investors
to find value. Understanding how to
navigate these differences, and what
technologies and market inefÏciencies
Guest comment by Eleanor Fraser-Smith exist, can help drive both returns and
impact within portfolios. These dif-
ferences can be particularly apparent
in the ways that countries define their
The world’s transition to clean energy requires transitions.

flexibility in both approach and mindset. Victory Hill’s Differing frameworks

head of sustainability compares and contrasts the EU Sustainability labels and benchmarks
are designed with the characteristics
and Mexico to illustrate the point of their target market in mind. Al-
though these tools can effectively guide

42 Infrastructure Investor • February 2025

 Analysis

investors within the confines of specific Energy transition index (ETI) score comparison between Mexico and the EU
regions, they are often not universally
ETI score Transition readiness Share of clean energy in final
applicable. consumption (%)
For example, a commitment to EU 63.8 59.3 19.8
lowering greenhouse gas emissions is average
pivotal to the EU member states’ tran- Mexico 56.3 37.6 5
sition, with the European Green Deal
The ETI is a weighted average of two sub-indexes, system performance (60%) and transition
centring around a goal of net zero by readiness (40%), that rates countries on 46 indicators, including regulation and political
2025. The EU Taxonomy mirrors this engagement, innovation and infrastructure

priority, channelling industries towards Source: World Economic Forum’s Energy Transition Index
systems such as electrified transport,
which is deemed more sustainable un-
der six environmental objectives. In a world where the path to sustain-
Mexico, in contrast, has targeted able systems can manifest in a variety of
its most ambitious environmental goal ways, a formulaic mindset that adopts a
on a different category of emissions, blanket understanding of sustainability
aiming to reduce black carbon, a short- is not compatible with a global transi-
lived climate pollutant, by up to 73 per- tion, and at worst can mean investors
cent by 2030. Many of Mexico’s urban adopt strategies that are doomed to fail.
areas are exposed to dangerously poor It’s also crucial to understand that
air quality as a result of the widespread while regulations and frameworks may
use of diesel and biomass engines, as “The challenge is not be impactful in driving effective sus-
well as the burning of fuel oil and fire- tainable investment on a regional basis,
wood, posing both longer-term climate simply to invest in if they become too much of a fixation
concerns and immediate health risks to for investors they run the risk of deter-
local populations.
‘green’ systems but ring investment from countries where
If there are limited public and pri- the transition is earlier in its evolu-
to drive transitions
vate resources within a country, the tion. There can be impactful drivers
transition to low or no carbon cannot that make sense for of sustainable investments in a country
happen all at once; the EU and Mex- outside of regulations – investors must
ico are at drastically different stages each market” adopt a globalised approach to the
of their transitions. According to the transition that drives progress towards
World Economic Forum’s Energy “greener” systems, rather than only
Transition Index, which measures striving for a fixedly defined “green”.
countries’ progress in the energy tran- The global energy transition will
sition, eight out of the top 10 most ad- continue to vary widely across countries
vanced countries are in the EU, while and markets, influenced by political pri-
Mexico ranks 57th. orities, resource availability, economic
While the EU may now be target- transition, so applying European green dependencies and technology. Applying
ing progress through the electrification guidelines to the Mexican economy green capital on a differentiated basis is
of transport, this process is slow and would produce a suboptimal applica- essential to creating meaningful change
not possible everywhere in the world. tion of green capital. in systems with widely differing needs
At this point in its journey to a lower and priorities.
carbon economy, Mexico is seeking to Black and white thinking? In an increasingly regulated space,
advance by introducing more stringent Regulations that define sustainability it is vital that investors avoid black
emission limits for conventional fuels. and evaluate what works best can be and white thinking over what is and is
These cleaner fuels are not Taxonomy powerful tools to help investors make not sustainable, maintaining context-
eligible but are critical for Mexico’s decisions and tell the story of their im- dependent judgement and acknowl-
transition. pact. However, it’s important to under- edging that there is no one way to drive
The EU Taxonomy attempts to de- stand that they can present a warped progress in the transition. n
fine sustainable practices in absolute picture of progress when they are used
Eleanor Fraser-Smith is head of sustainability
terms, but those terms are founded on outside of the markets they were de- at Victory Hill Capital Partners, a private equity
the nature and maturity of the EU’s signed for. firm based in London

February 2025 • Infrastructure Investor 43

 Analysis

T
he construction and op-
eration of undersea pipe-

Choppy waters:
lines and power cables
are a crucial component
of the global energy in-

The risks of investing

frastructure, but these
projects, indispensable for ensuring
energy security and international
connectivity, present significant legal,
financial and operational challenges.
Their complexity lies not only in the
in sub-sea infrastructure
technical nature of the works, but also
in the associated legal implications and
risks – including growing geopolitical
concerns – that require strategic man-
agement by investors, governments
and operators.
From the beginning, the construc- Guest comment by Catia Tomasetti
tion and maintenance of sub-sea pipe-
lines and submarine cables (especially
those in deep waters) present extraor- Despite the complex nature of sub-sea infrastructure,
dinary challenges. Marine environ- which makes investment in these assets particularly
ments are characterised by extreme
conditions, such as high pressure, low challenging, there are ways for investors to mitigate
temperatures and corrosion, which re- associated risks, a partner at BonelliErede argues
quire the use of advanced technologies
and materials.
These projects must also consider
the strict constraints imposed by en-
vironmental legislation, both at the
international and regional level, such
as the UN Convention on the Law of
the Sea, which establishes fundamental
principles for the protection of the ma-
rine environment and the management
of natural resources.
Once a project enters the operation-
al phase, it remains vulnerable to other
risks. These include fishing activities,
anchoring and natural phenomena,
such as earthquakes or underwater
landslides, that can cause damage to
cables or pipelines, thus necessitat-
ing complex and costly repairs. The
logistics of such interventions require
specialised vessels and highly qualified
personnel, with costs that can weigh
significantly on project budgets.
A particularly sensitive aspect of
these projects is their exposure to ge-
opolitical risks. Submarine infrastruc-
ture is increasingly exposed to poten-
tial hostile actions, requiring enhanced

44 Infrastructure Investor • February 2025

 Analysis

co-operation between states, regulators for incidents involving submarine in- acquisition of comprehensive insurance
and private operators. frastructure outside state jurisdictions. policies can also help reduce exposure
The vulnerability of these assets The regulatory ambiguity is further to residual risks. Maritime policies cov-
has been highlighted by recent inci- aggravated for networks used for both er a wide range of risks, from physical
dents such as the Nord Stream pipe- civil and military purposes, which com- damage to business interruption to the
line explosions, which raise complex plicates the attribution of responsibility ever-present threats of cyberattacks,
questions, both legal and operational, and the legal qualification of attacks. while political risk insurance offers pro-
particularly regarding the classification An evolution of international law is es- tection against expropriation, violence
of such actions as acts of aggression in sential to establish clear rules to protect or government action that could jeop-
international law. these strategic infrastructure assets. ardise the project. These contractual
Issues of submarine infrastructure In these circumstances, the balanc- instruments are the backbone of risk
are inevitably intertwined with those of ing of public and private interests is management for all parties involved.
national security and instruments such also often under scrutiny, especially Furthermore, collaboration with
as golden power and the provisions when ownership of these assets is in the multilateral institutions, such as devel-
on the Italian National Cybersecuri- hands of private or public entities of opment banks or international organ-
ty Perimeter represent extraordinary foreign states. The Nord Stream 2 case isations, offers additional guarantees
measures taken to protect these stra- highlighted the need to apply Europe- through political and legal support.
tegic assets. However, the underwater an regulations to prevent monopolies Government incentives, such as subsi-
dimension is not specifically addressed and ensure a balance between energy dies and tax breaks, are a further ele-
in many European regulations that security and free competition. ment of security for investors, especial-
outline security standards for critical ly in projects considered strategic.
infrastructure. Mitigating the risks
For investors, sub-sea pipelines and A safe way forward?
Tricky regulatory waters submarine cables represent both a stra- While sub-sea pipelines and submarine
The legal regulation of submarine tegic opportunity and a source of risk. cables remain crucial for global energy
infrastructure, such as cables and Investment security depends on careful security and international connectivity,
pipelines, constitutes a complex and planning and the availability of legal and they are vulnerable to risks and repre-
fragmented area, with numerous inter- financial instruments to mitigate risks. sent a global challenge technically, le-
acting national, European and inter- Rigorous due diligence during the gally and strategically.
national regulations that consider the preliminary project phase allows the A co-ordinated approach, involving
specificities of the underwater context, identification of major critical issues, states, international organisations and
including seabed, water column and such as technical, environmental and private actors, is essential to ensure the
surface. While the installation, main- geopolitical risks. Contractual clauses protection and sustainability of these
tenance and protection of these infra- and allocation of liabilities are a key el- assets. Within the context of increasing
structure projects requires a co-ordi- ement to protect investors. Force ma- global interdependence, the definition
nated approach, this still seems like a jeure provisions, for example, protect of a clear regulatory framework and the
distant ambition. against the consequences of unforeseen promotion of international co-opera-
A key element of complexity is state events such as natural disasters or geo- tion are essential to safeguarding the
sovereignty, which emerges with ur- political conflicts. resilience and security of submarine
gency when such infrastructure cross- Considering the high level and num- infrastructure.
es international waters or exclusive ber of risks, it is essential to determine However, despite their complex
economic zones. Article 79 of the UN liability in the event of disruptions or nature – undersea pipelines and sub-
Convention on the Law of the Sea damage both during construction and sea infrastructure are likely one of the
grants coastal states the right to estab- operation, and responsibility should most complex types of projects an in-
lish conditions for the protection of be clearly allocated through contracts vestor could be involved in and should
cables and pipelines only within their between the actors involved, which in- not be rushed into – there are plenty of
territorial waters. Infrastructure locat- clude builders, operators and insurers. ways an investor can mitigate the risks
ed beyond those territorial waters does Equally important are dispute reso- to which these essential and critical in-
not fall under full state jurisdiction, lution mechanisms, which ensure that frastructure assets are exposed to. n
thus limiting sovereign intervention. any disputes between the parties are
The lack of a clear legal framework resolved quickly and efÏciently, avoid- Catia Tomasetti is a partner and the leader
of the infrastructure, energy and ecological
is further accentuated by the absence ing protracted court proceedings. The transition focus team at Italian law firm
of a strict definition of “armed attack” creation of emergency funds and the BonelliErede. She is based in Rome

February 2025 • Infrastructure Investor 45

 Data

Manager in focus

Clients
Actis LP Headquarters Institution

Acquired by General Atlantic last year, Alaska Permanent Fund US Sovereign wealth
the London-based firm continues to fund

operate under its original brand name Employees Retirement System of Texas US Public pension
and to focus on investing in emerging
markets. One such investment is Epoch Industriens Pension Denmark Public pension

Digital, the first data centre platform La Cassa dei Dottori Commercialisti Italy Private pension
Actis launched in Asia, excluding China,
last June. “Everywhere we go where Margaret A Cargill Philanthropies US Foundation/
endowment
we have data centres, and where our
energy and infrastructure teams have a Mercer Investments US Asset manager
renewable business on the ground, we
National Pension of Korea South Korea Public pension
will link the two,” Thomas Liu, head of
greater China and Asia data centres, real Nordic Investment Opportunities Denmark Fund of funds
estate, at Actis told us at the time. In this
issue (p. 34), he talks about Malaysia’s New York City Employees' US Public pension
Retirement System
appeal as a destination for data centre
build out in Southeast Asia. Pensioenfonds PGB Netherlands Private pension

Funds in market, as of 24 January, 2025

Fund Amount raised Vintage

($m)

Actis Energy 6 2024

Actis Long Life Infrastructure Fund 2 800 2022

Fund performance

Fund Vintage Fund size Called DPI RVPI TVPI IRR Last Data source
($bn) (%) (x) (x) (x) (%) reporting
date

Actis Energy 5 2020 4.7 43.21 0.20 0.68 0.88 -13.30 31 Mar 24 State Board of Administration of
Florida

Actis Long Life 2019 1.23 104.97 0.15 1.05 1.20 9.30 30 Jun 24 Teacher Retirement System of
Infrastructure Fund Texas

Actis Energy 4 2017 2.75 104.68 1.30 0.13 1.42 13.40 30 Jun 24 New York City Police Pension
Fund

Actis Energy 3 2014 1.2 114.06 1.29 0.02 1.31 8.54 31 Mar 24 Santa Barbara County
Employees' Retirement System

Source for all data: Infrastructure Investor

46 Infrastructure Investor • February 2025

 Data

Investor in focus
Aware Super
One of Australia’s largest superannuation Aware Super’s total AUM stands at A$176.96bn, as of 30 Jun 2024 ($bn)
funds, Aware Super was 18th in our Global
Investor 75 ranking with an infrastructure 0 20 40 60 80 100 120 140
portfolio valued at $12.1 billion, accounting for
11 percent of its $113.8 billion total AUM. Infrastructure

Last April, Infrastructure Investor reported

that Aware Super would be raising its
Real estate
infrastructure target to 11.5 percent. The
sector focus will be on digital infrastructure,
renewables and transport, while also Private equity
considering investments in social infrastructure
and utilities.
In October, portfolio company Vocus – a Private debt
digital infrastructure business, owned alongside
Macquarie Asset Management – announced
the acquisition of the fixed business and fibre Other

network assets of ASX-listed telecoms firm

TPG in a bolt-on deal with an enterprise value
of A$5.25 billion ($3.32 billion; €3.16 billion).
The acquisition will see Vocus become one Current allocation (%)
of Australia’s largest fibre network players, in
what Maria Donnelly – Aware Super’s senior 
  
 P  

P   O
portfolio manager, infrastructure – described as
a “transformational transaction”. 0 20 40 60 80 100

“We think of it as reshaping the Australian

telco landscape, and it positions Vocus to be
able to compete really well with the larger
incumbents in the market, so we see a lot of
benefits for customers and consumers,” she
told Infrastructure Investor at the time.

Fund commitments

Fund Manager Fund size Strategy Region Sector

Generate Capital Fund II Generate Capital $2bn Core North America Renewables, utilities, transport

Westbourne Infrastructure Westbourne $3bn Debt Western Europe, Asia-Pacific Utilities, transport, social
Debt Program 3 Capital infrastructure, digital infrastructure

IFM Global IFM Investors $56bn Core North America, Western Europe, Utilities, power & transmission,
Infrastructure Fund Central/Eastern Europe transport, digital infrastructure

Palisade Diversified Palisade A$1.2bn Core-plus North America, Asia-Pacific Renewables, power & transmission,
Infrastructure Fund Investment transport, social infrastructure, digital
Partners infrastructure, data centres

IFM Australian IFM Investors A$6.53bn Core Asia-Pacific Utilities, power & transmission,
Infrastructure Fund transport, social infrastructure

Source for all data: Infrastructure Investor

February 2025 • Infrastructure Investor 47

 Agenda

Macquarie’s
dynamic duo in APAC
Next month we bring you an in-depth look at Macquarie Asset
Management’s views and strategy related to the Asia-Pacific
region. And there’s no one better to take that Deep Dive than
Macquarie’s two co-heads of infrastructure for Asia-Pacific –
Verena Lim and Ani Satchcroft

Don’t miss our March issue!

48 Infrastructure Investor • February 2025
Best Practice in Infrastructure
Asset Management
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 Managing Risk in
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Qualifying and quantifying the impact of external
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Content highlights:
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• Comprehensive overview and analysis of key regulations impacting the sector by region
• Case studies from market participants showcasing how investors handle regulatory interventions
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Special offer to subscribers:
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