January 2, 2020

Energy Investment Management

What is Infrastructure & Energy Investment Management?

As the name suggests, Investment Management is about managing investments – choosing which assets to finance in order to get the financial return sought at the level of risk you’re comfortable with.

Infrastructure & Energy Investing: This is investing in the equity of infrastructure or Energy assets – mostly acquiring existing ones, but sometimes also greenfield projects.

Typically within the Investment Management function you will split your time between origination (finding new assets to invest in) and deal execution (completing the deals), as well as managing the existing portfolio (often separately run by Asset Management or Portfolio Performance functions). There can also be some fundraising work depending on the type of organisation or fund you work with. 

As an Infrastructure & Energy Investment Manager, you’re investing in assets that provide essential utilities or services – Core examples being;

Transport Infrastructure; Toll roads, Airports, Ports, Bridges, Waterways +

Social Infrastructure; Hospitals, Schools, Prisons, Stadiums +

Energy; Power Generation (Renewable Energy and Conventional Power), Transmission & Distribution +

Technology, Media and Telecoms; 5G Networks, Data Centres, Subsea Cables, Last mile Fibre +

Infrastructure does NOT include real estate assets that are strictly for people to live in or for businesses to operate from. The distinction is that there must be some kind of essential service offered by the asset.

Typically, Infrastructure & Energy Assets are extremely stable and will be around for decades; some, like airports, have natural monopolies that make them incredibly valuable.

They are also less sensitive to economic and business cycles and suit investors with a long-term outlook who may favour stability over potential higher returns. Many of these assets are dependent on government regulation, or are even developed in partnership with the government.

Jobs in Infrastructure & Energy Investment Management

At its simplest, the career path within an Infrastructure & Energy Investor could be;

Investment Analyst – Entry level position up to two or three years experience. 

Investment Associate OR Investment Executive – Level above Analyst. Typically 3-6 years experience

As an Investment Analyst of Investment Associate within an Infrastructure & Energy Investment Markets, you will do the same work expected in a traditional Private Equity firm; financial modelling and deal execution (due diligence, managing external advisors), portfolio management and divestment, market research and reporting to limited partners. Some Investment Associates are also involved in launching new funds and fundraising.

Investment Manager – Sufficient experience to manage a small deal team supported by Analysts and Associates but reporting in to a Director for support.  

Senior Investment Manager – More responsibility again.

Investment Managers typically coordinate Investment Analysts and Investment Associates. They will lead small deal teams and run processes from initial teaser review to Investment Committee. At this point however it is typically the Investment Director or above that will propose an investment. Investment Directors will be overseeing Investment Managers and coaching the future Directors on successfully navigating a process and closing a transaction. 

Investment Director – Running a team or sector or function. Will present to Investment Committee. 

Investment Directors manage teams of Investment Managers, Associates and Analysts. They will have ultimate responsibility for an end to end process (origination through to execution). Depending on the size of the organisation, Investment Directors could report into Managing Directors or Partners or CEO’s in smaller funds. 

Managing Director / Managing Partner 

The Managing Director or Managing Partner is the top of the line within traditional structures. They will dictate strategy and often lead on fundraising (if appropriate).

In addition to the above structure, some companies will operate a different title system. Common examples include VP’s and Principals.

History of Infrastructure & Energy Investment Management

Unlike traditional Private Equity, Infrastructure and Energy Investment is a relatively young game. Circa twenty years ago it was almost unheard of, globally, to attract private financial capital for large infrastructure assets. Most Infrastructure or Energy assets belonged to governments or corporates. In the early 2000’s several countries such as Australia and Canada pioneered attraction of private (financial) capital for both construction of new infrastructure and monetisation of existing assets. Australian bank Macquarie is widely credited as the first-mover who actually started raising Private Equity funds with the mandate to invest exclusively in infrastructure.

Types of Infrastructure & Energy Investment Management

Within Infrastructure, financial investors can be broadly divided into two group; fund managers and institutional investors (the latter being pension plans, insurance companies and sovereign wealth funds). Until recently the landscape was dominated by fund managers, with institutional investors supplying money to them. However, in recent years big institutional investors have been doing more direct infrastructure and energy investment – that is, building their own direct investment teams that would compete for deals with fund managers. Some (especially Canadian pension plans) are ahead of the curve and strong and experienced enough to do deals on their own. Given high quality of people and cost of capital being lower than traditional Infrastructure funds, they are seen as a real threat. In some sectors however, the traditional fund manager with their different approach to risk will find it easier to adapt to the increasing requirement of Merchant Risk – particularly within Energy and TMT segments. 

Example Archived Infrastructure & Energy Investment Management

Investment Analyst/Energy & Infrastructure Fund 

The successful Investment Analyst will join the portfolio performance team, a central group function that leads valuation services, commercial project reviews, value creation and project divestment.

Investment Manager – Power & Energy Equity Fund

Investment Manager sought by Power & Energy Equity Fund looking to scale their London business development team. With an active interest across Renewable Generation, emerging Smart Energy (Battery Storage, Smart Metering) and Retail Energy, you will lead origination, Due Diligence and investment execution.divestment.

Investment Director – Emerging Energy & Telecoms

Global Infrastructure & Energy Investor looking to identify an Investment Director to lead their push into Telecoms and Emerging Energy segments globally. Prioritising Energy Storage, Electric Vehicle Infrastructure and Telecoms, the successful Investment Director will lead strategy, origination and execution across the group.