Infrastructure Deals Need Managers
Ever since the Australian bank Macquarie proved there were profits to be made in public infrastructure projects - toll roads, power plants, airports and the like - U.S. and European investment banks have waded into the sector, launching funds and hiring senior bankers to manage them.
Late last year, banks like Jefferies and Goldman Sachs joined the fray. Earlier, Morgan Stanley and JPMorgan formed public infrastructure funds. Credit Suisse and Merrill Lynch have also undertaken projects involving public assets. As a result, banks are hiring veterans to help run these practices, which generate substantial advisory and M&A fees (anywhere from one to two percent) as well as returns on the assets themselves, which can be sold, repackaged or issued as stock to the public.
So far, staffing of public infrastructure practices has been top-heavy. But as the businesses mature, banks will need to bulk up on resources, filling out their advisory teams. Needs will exist for high-level managers who can handle the typical bank services these businesses provide, specifically in areas like advice and lending. A London-based search consultant says Goldman Sachs is filling advisory positions in New York and London.
In December, Jefferies announced plans to expand its European investment banking group into maritime, oil services and infrastructure, hiring Anne-Christin Dovigen and Nick Davies from HSBC, along with Andrew Meigh as managing directors.
In a statement, Chris M. Kanoff, co-head of Investment Banking, signaled Jefferies' commitment to the sector, saying the bank "is deeply committed to providing a world-class offering to transportation, oil service and infrastructure companies as an integral part of our broad and thriving global investment bank."
Meanwhile, Goldman Sachs launched a $3 billion fund to "create and pursue large scale investment opportunities." Goldman has already invested in pipelines and bid for London's City Airport. In the U.S., it has invested in toll roads in Indiana and Chicago.
JPMorgan aligned its practice with its global real estate business, headed by Joe Azelby. Similarly, both UBS and Credit Suisse are capitalizing on real estate expertise to provide advisory services in deals for airports. Credit Suisse also formed a joint venture with GE Infrastructure to invest in energy, water assets, airports, air traffic control, ports, and roads.
The reason: more public assets are coming on the market, says Richard Lipstein, of Boyden Executive Search. "As the private sector increasingly takes on public responsibilities and proves it's a viable business based on returns, it'll require managers," he says.