Welcome back to the Alt Goes Mainstream podcast.
Today’s episode dives into the evolution of infrastructure investing with the leading scaled specialist firm in infrastructure.
We sat down in Stonepeak’s Hudson Yards office with the firm’s Co-President Luke Taylor to discuss the inner workings of the infrastructure investing world and unpack the story of how Stonepeak’s rapid ascent has seen the firm climb to $76.3B in AUM in 14 short years.
Luke brings a wealth of experience to the infrastructure investing world. He is Co-President of Stonepeak and a member of all of the firm’s investment committees. He’s been investing in infrastructure for over 20 years, joining Stonepeak from infrastructure investing pioneer Macquarie Capital.
Luke and I had a fascinating and thought-provoking discussion about infrastructure investing and why it’s becoming an increasingly important part of the private capital ecosystem. We covered:
How Luke went from growing up on a sheep farm to investing in infrastructure in New York.
What Macquarie taught him about how to approach infrastructure investing.
Why he took the entrepreneurial leap to build Stonepeak and join Chairman, CEO, and Co-Founder Mike Dorrell from the firm’s earliest days.
Why infrastructure investing is more than toll roads, airports, and bridges.
How there are elements of a private equity approach to investing in, building, and operating infrastructure assets.
Where infrastructure fits in an investors’ portfolio.
Why individual investors should consider exposure to infrastructure assets.
Has infrastructure proved itself through an inflation cycle?
Why scale matters in infrastructure investing.
How Stonepeak identified investing in data centers early on and well before the data center boom began.
What type of demeanor and mindset makes for a successful infrastructure investor.
Thanks Luke for coming on the show to share your expertise, wisdom, and passion for infrastructure investing.
Clip #1: What does it take to be a truly great infrastructure investor?
Clip #2: Driving value creation in infrastructure investing.
Clip #3: Infrastructure as a defensive investment.
A word from AGM podcast sponsor, Ultimus Fund Solutions
This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.
To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.
Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.
We thank Ultimus for their support of alts going mainstream.
Show Notes
00:00 Introduction to Ultimus Fund Solutions, our Sponsor
01:18 Welcome to the Alt Goes Mainstream Podcast
02:04 Guest Introduction: Luke Taylor
02:45 Luke Taylor's Background and Journey
04:52 Early Days at Macquarie
05:47 Entrepreneurial Spirit at Macquarie
08:13 Building Stonepeak
10:37 Value Creation in Infrastructure
12:28 Mindset of an Infrastructure Investor
13:38 Balancing Long-Term and Agile Thinking
14:23 Key Skills for Success
16:20 Underwriting and Risk Management
16:48 High Barriers to Entry
19:36 Operational Intensity and Value Creation
22:51 Network Effects in Infrastructure
24:19 Defensive Position of Infrastructure
24:49 Infrastructure in Private Markets
26:37 Inflation and Infrastructure Performance
27:28 Portfolio Construction and Infrastructure
28:33 Productizing Infrastructure Investments
29:01 Equity, Credit, and Real Estate Strategies
30:51 Thematic and Opportunistic Investing
31:23 Early Investment in Data Centers
31:32 Entrepreneurial Staff at Stonepeak
31:36 Identifying Investment Opportunities
31:45 Exploring Data Centers
32:11 Challenges in Data Center Investments
32:34 Discovering Interconnection Hubs
33:11 The Role of AI in Data Centers
36:14 Downside Protection in AI Investments
36:28 Underwriting AI Thematics
36:49 Capital Needs in AI and Data Centers
38:40 Navigating Increased Capital in Infrastructure
40:38 Scaling Stonepeak's Infrastructure Investments
41:16 Diversification in Infrastructure Investments
42:26 Competition in Infrastructure Investments
43:58 Developing an Edge in Origination
44:35 The Role of Structure in Deal Sourcing
45:23 Evolution of Infrastructure Investment Space
45:57 Building New Infrastructure Assets
46:09 Exits in Large Infrastructure Deals
47:03 Evergreen Funds and Long-Term Holdings
48:49 Stonepeak's Wealth Business Strategy
53:56 Challenges in Starting a Wealth Business
54:29 Importance of Deal Flow
56:35 Navigating Volatile Markets
57:03 Risks in Infrastructure Investing
58:10 Future of Infrastructure Investments
Editing and post-production work for this episode was provided by The Podcast Consultant.
