talk directly to the equity-holders. If you want to structure debt that is in line with the pension fund’s mandate, while creating that paradox of securing the debt whilst obtaining the most attractive yield, you need to come early and ideally talk directly to the financial sponsors.


In essence, we are always on the sponsor’s back to have early and proprietary access to investments. We want to be a price maker when arranging the debt. Foucoin: We value durable, long-term partnerships with spon- sors and issuers in the infrastructure market. These relation- ships usually come from doing an initial transaction, and then repeat transactions with the same people. Creating long-term, direct partnerships with key players in the infrastructure mar- ket has been an important factor in shaping PIC’s role as a lender in the sector.


One way we achieve that is by offering as much flexibility as possible to the borrowers. Some of the things we do, for instance, include providing deferred drawdowns which can be useful for sponsors, especially when they seek to deliver pro- jects involving an initial construction phase. As an institutional


Infrastructure investors now have to take some merchant risk.


Michael Ebner, KGAL Investment Management


lender, we can also go long in terms of maturities, when we are comfortable with the credit profile of an asset or company. Whistler: Every country should have a nationally defined contri- bution under the Paris Climate Agreement and/or a strategy built around the Sustainable Development Goals. There should be something coming from government to set a clear direction. We are seeing things coming out, such as the EU’s Fit for 55, but there needs to be more direction, much more consistency in terms of strategy and planning from governments. Having three prime ministers in the UK in a few months does not help, but this is not the only country where there is politi- cal instability and a lack of structure around this. There has to be a role for governments going forward. It would be great to see more engagement between governments and industry and with developers as well. There need to be more connections throughout the chain. Taj: Government has a role to play, but increasingly we will see corporations driving the transition. We see a lot of corporates, like Amazon and Google, contract out wind farms to renewable operators, so the government has nothing to do with it. After the energy crisis in Europe, more companies will proba- bly look to secure their own energy sources so that they are not hostage to gas curtailment, such as we have seen in Germany. They will also try to secure those sources over the long term to help reach their decarbonisation goal. In my world, that is a key issue and we constantly engage with corporates to under- stand how they are going to affect that energy transition. Investing in renewable energies is one aspect of that. The transition, which was initially spurred on by governments because the technologies were not economical without subsi- dies, is going to be a lot more corporate driven long term. A supportive government framework would be helpful, but it is not essential anymore. Lloyd: It is not that the corporates are taking that initiative themselves, it’s the consumer that is demanding it.


December – January 2023 portfolio institutional roundtable: Infrastructure 19


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