Funds Europe – What are some of the most interesting investment opportunities linked to the needs that you’ve mentioned already, and what is it that makes them so appealing?
Chladek – We’ve touched on connectivity and digital services. Infracapital has been an early-stage investor in several fibre businesses across Europe. Typically, we are identifying the opportunities where there is a need for private infrastructure investment to fund the fibre rollout. In some European countries the fibre rollout has been more advanced through accelerated programmes and the high fibre penetration has led to limited new opportunity. We have established platform businesses in the UK, Germany and Poland where we identified that there was a requirement for significant investment in the fibre rollout in rural areas.
Typically, to make the investment economically viable, rollout programmes receive government support to enable such private investment. This support can be through either direct contributions towards capital expenditure or sometimes voucher schemes, where the general public or companies are given vouchers by the government to subsidise the cost of their fibre installation.
With the impact of Covid, the lockdowns and the move to flexible working, this investment has been even more critical in those communities and demand has been significantly higher. This really is developing much-needed new infrastructure to provide essentially connectivity to these communities.
Lyse – Anything that touches renewable energy, whether it’s wind, solar or others, is very much in fashion. We have also seen projects among some of our clients around other energy sources. For example, in the shipping industry, there appears to be a shift towards alternative fuel types such as methanol or green methanol, produced off biomass.
Everybody wants to go green and all that has been accelerated by the pandemic, where people have become a bit more conscious of these issues. We’re just out of the COP26 in Glasgow. Some saw that as a failure, others as an okay-ish deal. Regardless, the clients that we have – fund managers and asset owners – want to have the green certifications or good ESG scores, because that’s what their investors want to have. We see more capital being allocated to these low-carbon or decarbonised investment strategies.
Tsoneva – One thing on my mind is renewables: I think there is a lot more coming in offshore wind. What I particularly like in the UK is the ‘contract for differences’ mechanism – of course, everyone has their own view whether you get the right return, but what we’ve seen on the offshore wind side is quite spectacular in terms of its early adoption, as well as the pots of money that are available for new technologies, like floating windfarms, for instance. So, I’d emphasise that there are still interesting opportunities in the renewable sector.