The last place to earn $100m in finance
The combination of Thames Water and sewage in rivers mean that infrastructure investors are unpopular in the UK right now. However, away from the unedifying aroma of the UK water network, infrastructure is having a moment. And if you're an experienced professional, you can make a huge amount of money investing in it.
Briton, Dan McCarthy, is CEO of One Search, a New York-based infrastructure-focused executive search firm. While private equity investing suffers in an era of higher interest rates and private credit heats up, McCarthy says infrastructure jobs are thriving.
"Infrastructure people have always been seen as the poor relations in private credit," says McCarthy. "But infrastructure is now seen as a safe haven for investors and a lot of big players who weren't in infrastructure in the past want to move into the space."
BlackRock has invested in infrastructure for a while, but is among the funds refocusing on the area. - CFO Martin Small said assets flowing into private credit and infrastructure were key contributors to BlackRock's annualized $3bn organic asset growth in the second quarter, and that both will be an area of focus in the future. Ares Management just raised $2bn for an infrastructure secondaries fund. Steve Eisman at Neuberger Berman Group thinks that investing in a decarbonized electricity grid is this moment's number one opportunity.
McCarthy has a long list of major infrastructure investment moves that happened in the first half of 2023. They include the likes of the formation of Apollo-backed Apterra Infrastructure Capital by two former Investec executives - Michael Panetlogianis and Ralph Cho - in the US, and Will Devenney's move from Legal and General to become managing partner of London-based Power Sustainable Infrastructure Europe.
As money flows into infrastructure investing, McCarthy says pay in the sector is soaring. Carried interest is now common above the junior ranks at infrastructure funds and can be very generous. "We're seeing partners coming in on deals where the carry over the fund's life is worth $20m to $30m," says McCarthy. "That's at some of the larger funds in Europe and America."
The real draw isn't even the enormous carried interest payments though. It's the opportunity to share in the equity with the general partners of the fund. This is only on offer to the most senior people, but is a reflection of the battle over the most experienced talent. "There is a very finite universe of senior infrastructure credit names," says McCarthy. "Some funds are offering to make senior people into general partners."
In this way, McCarthy says infrastructure people are suddenly been given an opportunity to make "generational wealth." - "Over a long time period, you might make $100m with a 20% equity as a general partner."
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