In this episode of the [i3] podcast, Conversations with Institutional Investors, we speak with Danny Latham, Partner and Head of Australia and New Zealand for Igneo Infrastructure Partners. We discuss the evolution of infrastructure assets, termed "Infrastructure 2.0," which includes renewable energy, digitalisation, and waste management. 
Danny highlights the shift from traditional infrastructure to more dynamic, B2B-focused assets, emphasising the importance of cash flow predictability and regulatory risks. He also touches on the role of gas as a transition fuel, the potential of hydrogen, and the integration of water management in infrastructure projects. 
Finally, Danny explains his investment strategy, which involves active management, matching up hard assets with good people, and leveraging mid-market opportunities for value creation.

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 Overview of podcast with Danny Latham, Igneo Infrastructure Partners

02:00 The Four C’s of Lending: capacity, capital, collateral and character
04:00 Funding versus financing; there is plenty of capital in the world, but are people prepared to pay for services and products?
05:30 My first venture into infrastructure was actually a prison in rural Victoria
09:00 Changes in the infrastructure over the last 30 years
13:30 There used to be a perception that these assets looked after themselves
17:00 Infrastructure 1.0 versus 2.0
18:30 Theoretically, infrastructure 1.0 should be a little less risky, but you are trading demand risk for regulatory risk
24:00 Are people taking more risk because of the odd YFYS benchmark? Yes, we are seeing that
26:00 Atmos Renewables, a key example of how Igneo invests
27:00 We’ve moved away from large caps, because we see more opportunities, better bolt-ons and better bilateral deals in the mid-market space
30:00 Today, our focus is on taking ownership stakes of 50 - 100 per cent, so we are driving the bus
35:00 Large, hyperscale data centres today are probably more frothy than other parts of the market
36:30 Australia’s power consumption will double between now and 2050. Where is that power going to come from? The potential conflict between energy transition, decarbonisation, and the reliability and affordability to support growth is a huge thematic across the globe.
38:00 Natural gas does have a long term role as a transition fuel
41:30 In the UK, the last coal-fired power plant has been shut down. In fact, one of the last assets we’ve acquired in the UK was a waste-to-energy asset that is located on an old coal-fired power plant site.
44:00 In a waste-to-energy model, you get paid for your fuel. So it is quite a different model.
46:30 In Australia, we are actually not that good at recycling water. One of our businesses takes wastewater and uses that to water the McLaren Vale wine region.
50:00 Adjacency benefits: Amazon has just bought the plot of land next to our waste-to-energy plant in the UK
54:00 AI and infrastructure; is it all about data centres?

 

Full Transcript of Episode 116

Wouter Klijn  00:00

 

Hello and welcome to the i3 podcast: ‘Conversations with Institutional Investors’. My name is Wouter Klijn, and I'm the Editorial Director for the investment Innovation Institute. For more information about our educational forums for institutional investors, please visit our website at www.i3-invest.com. That's the letter i and the number three at invest.com. There, you can also subscribe to our complimentary newsletter. I3 insights in which we discuss investment strategy and asset allocation questions with asset owners from around the world. Now, as you all know, we love our disclaimers in this industry, so here's ours. This recording is for educational purposes only. It does not constitute financial advice and is intended for institutional and wholesale investors only. Please enjoy the show

 

This episode of The i3 podcast was sponsored by Igneo Infrastructure Partners. As such, the sponsor may make suggestions for topics, but final control over the podcast remains with the investment Innovation Institute. 

 

Welcome to Episode 116, of the [i3] Podcast, Conversations with Institutional investors. In this episode, I'm speaking with Danny Latham, who is a partner and head of Australia and New Zealand for Igneo Infrastructure Partners, a manager that's owned by First Sentier Group. Danny and I are discussing the new wave of infrastructure assets, also referred to as Infrastructure 2.0. What is this and how does it fit in with an existing portfolio of assets? Are they riskier than traditional core assets, and what's their return profile? We take a look at assets such as waste to energy in the UK, where Amazon has just bought a plot next to Igneo's plant, we will discuss gas as a longer term transition asset and the national security aspects of it. Finally, we talked about capturing and repurposing wastewater and of course, AI, please enjoy the show.

 

Danny, welcome to the show.

 

Danny Latham  02:26

Thank you very much.

 

Wouter Klijn  02:27

So tell me a little bit about your background before we get into all the details of the deals and the pipes and everything. Why investing and why particular infrastructure?

 

Danny Latham  02:37

Sure. Yeah. So thank you. Thank you for the opportunity to be here. So in some respects, sort of my, my journey to infrastructure really started with, I guess my first exposure to the investment industry was more in mortgage securitization, okay, so back in the sort of the early 90s. So yeah, been around a little while, and so as part of that sort of evolution. So been involved in sort of a lot of the, I guess, a lot of the foundations around, sort of credit analysis and the like and, and I guess, sort of some of those learnings for being sort of good stead for, I guess, sort of the subsequent career in infrastructure. And I guess, sort of some of those principles around, if you like the four C’s of lending,

 

Wouter Klijn

The four C's?</