Welcome back to the Alt Goes Mainstream podcast.
Today’s episode dives into the evolution of infrastructure investing with a leading scaled specialist firm in infrastructure.
We sat down in Stonepeak’s Hudson Yards office with a pioneer in infrastructure investing: Mike Dorrell.
Mike is the Chairman, CEO, and Co-Founder of Stonepeak, building the foundations for the firm to achieve a rapid ascent to $76B from its founding in 2011.
Mike brings deep expertise to bear in the infrastructure asset class. He has over 20 years of experience investing in infrastructure, starting his career at Macquarie, where he ultimately held the title of Senior Managing Director. He then joined Blackstone, where he was a Senior Managing Director in Private Equity and Co-Head of the Infrastructure Investment group, before striking out on his own to build one of the industry’s largest infrastructure investing firms in Stonepeak.
Mike 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:
The early days of infrastructure investing.
How infrastructure investing has evolved.
How Mike’s experiences at Macquarie and Blackstone informed how he wanted to build Stonepeak.
How institutional investors have approached infrastructure investing and why individual investors should consider exposure to infrastructure assets.
Stonepeak’s DNA and what makes the firm different from other infrastructure investors.
Why being a scaled specialist is a competitive advantage.
How Stonepeak was built from scratch to scale.
How Stonepeak identified investing in data centers early on and well before the data center boom began.
Why launch a wealth solutions business and how it’s a reflection of the firm’s DNA, culture, and values.
Thanks Mike for coming on the show to share your expertise, wisdom, and passion for infrastructure investing.
Clip #1: There is a huge responsibility to owning and operating these assets.
Clip #2: Infrastructure has characteristics that are sought after.
Clip #3: Infrastructure assets have huge economic moats.
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 Message from our Sponsor, Ultimus
01:18 Welcome to the Alts Go Mainstream Podcast
02:05 Introducing Mike Dorrell and Stonepeak
04:09 Mike’s Early Career at Macquarie
07:12 Challenges in the US Infrastructure Market
12:17 Success Stories and Early Deals
13:20 Privately Held Infrastructure in the US
19:00 Public vs. Private Infrastructure
21:34 Stonepeak’s Significant Stats
25:03 Balancing Public Good and Investor Returns
26:55 Challenges in Infrastructure Pricing
28:52 Skills Needed for Infrastructure Investing
29:48 Access to Private Markets for Individual Investors
30:38 Institutional Market and Infrastructure
35:05 Asset Allocation and Infrastructure
35:40 Risk Spectrum in Infrastructure Investing
37:58 Private Equity vs. Infrastructure Investments
38:32 Institutional Allocation Trends
38:47 The Case for Infrastructure in Portfolios
39:10 Patience and Peace of Mind in Investing
39:38 Warren Buffet’s Investment Philosophy
40:03 Biggest Risks in Infrastructure
40:15 Regulatory Risks in Electric Utilities
40:59 Operational Questions in Data Centers
41:44 Evaluating Data Center Investments
43:40 The Economics of Building vs. Buying Data Centers
45:30 Pricing Power in Data Centers
47:04 AI’s Impact on Data Center Demand
48:26 Valuing Data Center Investments
51:49 Connectivity Data Centers Explained
53:39 Network Effects in Connectivity Data Centers
56:01 Challenges in Infrastructure Asset Pricing
56:18 Evolution of Infrastructure as an Asset Class
59:39 Founding Stonepeak
01:04:05 Experiences in Raising Capital for Infrastructure Funds
01:06:23 Lessons from Blackstone
01:07:36 Building a Strong Investment Culture
01:10:36 Scaling Stonepeak
01:12:48 Stonepeak’s Wealth Channel Initiative
01:15:49 Cycling and Investment Philosophy
01:17:50 Final Thoughts on Investment Process
Editing and post-production work for this episode was provided by The Podcast Consultant.
