NEPC’s Matt Ritter was recently featured in an Infrastructure Investor article discussing how he is not against funds that are ‘more private equity-like’, as long as LPs understand the risk. View excerpts below or read the full article on the Infrastructure Investor site here.
Investors in the infrastructure space need to be aware of the risks of the asset class as they look to meet the tailwinds of the energy transition and digital infrastructure, Matthew Ritter, partner and head of real assets at US-based LP consultant NEPC, told Infrastructure Investor.
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“I think there’s really attractive opportunities for investing in infrastructure today across the board, particularly in some of these themes, ” he said. “At the same time though, I think it’s really important that investors be aware of the risk profile of what they’re investing in.
“There are strategies that are much more at the secure end of the spectrum with long-term contracted cashflows with credit counterparties, and then there’s strategies that are a little bit more private equity-like. I think there are attractive opportunities across that spectrum, but it’s important to make sure that you understand what you’re investing in and that it aligns with your goals and objectives.”
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“As these themes have garnered a lot of interest, there’s been a lot of new entrants or managers launching new strategies to capitalise on these themes, ” Ritter outlined. “Some of which may call themselves infrastructure, but might actually look more like a private equity strategy in terms of the underlying risk and return profile.
“So, while total return is something we are mindful of, of course we want to be thinking about the risk that you’re taking. Is a strategy really taking on commercialisation or technology risk in a way that is not suitable for an infrastructure portfolio? Those are things we’re thinking about as well.”
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“A lot of commitments were made last year, but there is definitely a subset of investors that, just by their exposure through other private markets – whether it’s real estate, private equity or other areas – there’s been decreased liquidity in the market and therefore they’re getting fewer dollars back, ” he reasoned. “That has certainly constrained their ability to make new investments to some degree.”
Click here to read the full article on the Infrastructure Investor site.