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A look at Macquarie Capital's Infrastructure Advisory business


Speakers: Adam Hain with Anastasia Gurnell

Recorded on 25 January 2021.



Voiceover: Welcome to the Macquarie podcast series.



Anastasia: Hello everyone. My name's Anastasia Gurnell. I'm an analyst in Macquarie Capital or “MacCap” as we like to call it. I'm excited to host our next special edition of the Macquarie podcast series featuring Adam Hain, our Senior Managing Director of the Infrastructure Advisory group at Macquarie Capital. Adam has over 20 years of investment banking experience, 15 of those being at Macquarie. So, Adam, how would you describe what we do in the Infrastructure Advisory team and specifically, what is your role as the Senior Managing Director?



Adam: Sure. Thanks Anastasia and thanks for hosting this podcast. Yep. 20 plus years is true. It will be 20 plus years for a long time. The truth and a bit of background to how I got to where I am right now: I started in Melbourne, Australia, in 1994 at an investment bank, not Macquarie, but a different investment bank. And I started on the journey not having any idea what an investment bank really was, I was only excited to get my first job out of university, work in an organization of smart people and hopefully have the ability to travel the world. Fast forward to where we are today. My journey took me from Melbourne to New York for a while, then to Hong Kong where I was working a lot of the time in Korea in Seoul. I was regularly getting a Sunday night flight to Seoul and coming back Friday night, working out there in 97/98 until I was given the opportunity to move to London, where I arrived in 98, in the same organization in London at Canary Wharf. Interestingly doing TMT work (so technology media and telecommunications work) back in the late nineties when it was the original dot com boom, until I was very lucky enough to be called by some people at Macquarie in 2005 and offered the opportunity to work there. 15, 16 years later here I am as you said, Anastasia, running as a Senior Managing Director of the Infrastructure Advisory team. And what that means in a nutshell is we advise clients on buying and selling and provide strategic advice on anything they want to do that's in the infrastructure sector. Infrastructure sector is a very broad definition, covering things from renewables assets, utilities, power, airports, roads, ports, bridges, tunnels to telecommunications, data centers, digital services, healthcare, central services, oil, and gas midstream. I could go on and on and every year it seems the definition gets longer and longer, and that makes it more exciting for all of us in the team.



Anastasia: You've been in this business a little while and have seen it evolve over your career. What are we doing now that we didn't five years ago? And what sectors are our clients investing in that they weren't doing before?



Adam: It's an interesting question because, you know, the world has changed since five years ago, 10 years ago. But interestingly the very first thing I did in Melbourne, Australia, when working for an organization was selling assets for the state of Victoria; electricity distribution and generation assets. My career actually began right back in 1994, doing what I thought at the time was really boring energy stuff for the Victorian Government. It's amazing how sitting here in 2021 I can say to you, we are still involved in electricity assets and power assets. So I can say it was the same in 1994 and the same in 2021, but that would be completely simplistic because people thought of infrastructure as being just energy, power, water, transport assets, but no one thought of telecommunications, healthcare, digital, data centers, essential services, and so many more things that are becoming just a way of life for all of us, not just in the current environment, but even the environment of a couple of years ago. So, the definition of infrastructure has become very broad, and the types of businesses that we work with clients on has broadened. I mentioned Telco, I've mentioned digital, car parks, ferries and anything that is just essential to our life.



Anastasia: And have the clients that are investing in those things broadened or changed with the sectors?



Adam: Yep. It's one of the most amazing things. And about 10 years ago, I made a famous comment maybe to myself, but to my senior leadership team that I thought the market was too crowded, there's only so much infrastructure that can be bought and sold. Why are there so many clients, surely these clients are going to consolidate and the world's going to get smaller and smaller because there's only so much infrastructure in the world that people can invest in and grow and develop. I could not have been more wrong in saying that 10 years ago and every single year it surprises and amazes me how many more new clients we start to work with, how our existing clients get bigger, deeper, more specialist, with changed geographies. Sitting here today, I think our client list totals well over a hundred clients, which is a multiple of what it was before, and all of them are global leaders in the sectors in which they operate. So that deepening and size of client base just amazes me how it happens every year. And I think that’ll continue to be the case going forward.



Anastasia: And speaking of global leaders and how Macquarie are ranked number one Global Infrastructure Advisor, what makes us stand out and how have we achieved this?



Adam: I always like to think that we've achieved this firstly because of our longevity in the sector – we've actually seen things go through ups and go through downs, and through that we've had long standing relationships with clients. So, they've been through the ups and downs as investments have been made and investments have been exited. And again, it's something that we have a team for where all we focus on is just infrastructure, so if we want to know those things that are happening around the world, we can speak to global colleagues that are experts in infrastructure. It’s not just in the UK and Europe, but we can contact clients in the Americas, in Asia and Australasia in Africa. We have a global base, a global network, and a global sense of expertise, and we're very proud of what we do. We really care. We want to see our clients be successful and we want to share with them all the insight we can in that success.



Anastasia: And speaking of clients, as you said our success is measured on the strengths of those client relationships. How have you and the team managed to maintain those relationships over the past year? Obviously, all our regular events have been canceled and we haven't been able to meet face to face, so how are we maintaining those relationships?



Adam: Again, I think the longevity of our relationships with clients and the longevity of our presence in the sector has really put us in a good position through the lockdown/working from home environment. I say that for multiple reasons. The first is because clients call us, and we call clients, and they want to have a chat because it's about speaking to people that have been there for a long time and seen things working in good times and bad. Time is precious in the current environment. So you do pick the times and pick the people you call. Again, I think we're really lucky that when clients have a limited amount of time during the day, if they want to find out the answer or have a view or get an opinion on something, they’re picking up the phone to ask us, “What's going on?” and “What should we do?” And I think we're quite unique in our approach to clients in that we can have a good chat and have a laugh. We don't necessarily hide behind presentations all the time. At one stage when we were still able to get out and about, we were having a chat and coffee with clients and going for walks outside, within the rules and regulations of the current environment. And just talking about what's going on in work, talk what's going on in their businesses, meeting at a park nearby to where the client lives and just grabbing a coffee and going for a walk. It’s a bit more exciting than standing behind a zoom screen or a bit more exciting than a PowerPoint presentation or a spreadsheet. And I think clients appreciate that. I think today in the current world, you're getting to know your client better than ever and closer than ever when you're on zoom calls and in their household and they're in your household. So, I found it to be quite a great experience and one that probably strengthened our relationships with so many clients as we've got to know them closer and what they're going through, as well as respecting time and space and being very focused and efficient with the conversations.



Anastasia: Definitely. And so can you talk about one of our recent transactions that we've completed perhaps during the COVID pandemic or before?



Adam: The one that springs to mind, which probably brings out those points that we've just been talking about, is an offshore wind farm business called Ørsted that we sold for a company called Global Infrastructure Partners, commonly referred to as GIP, in which they had a 50% shareholding. When we look to sell companies there's a lot of preparatory work to do in getting the numbers right and the documentation ready, but this was the first sale process that was about to launch right at the start of when lockdown or the new working arrangements commenced. Therefore, we were having very open conversations with our client about how are we going to affect a transaction where the client is based in London, we're based in London, the asset is based in Germany, the 50% shareholders based in Denmark and the most likely parties that are interested in this business are going to be around the world. It's a business that is offshore a wind farm. How do you go visit that? How do you go visit the sites? How do you visit the technology and the management team doing this as we head into a world of, at that stage, the unknown? So, we spent a lot of time talking to the client, figuring out how we were going to do it, how we were going to contact people that might be interested, how we would facilitate Q&A and discussions with the management team and current shareholders, how we were going to do negotiations and proper diligence. And I will say it was unknown. It was unknown to all of us, but we had a great relationship with the client where we just said, I'll paraphrase, but we said, “Well, we think we can do this. Let's give this a go. We're all experts. We have people all around the world that do this all the time. We will think well and truly ahead of the curve about preparing for things.” If we accelerate to the end where the transaction was signed and completed, it's amazing to think that an asset that's offshore in Germany with a Danish co-shareholder, another shareholder based in London, and with us all working remotely, that we were able to successfully transact that business to a company that was based in Bangkok, Thailand, successfully for their very first major investment outside of that part of the world, in Denmark, in Germany, and in the UK with all of us on screen, as well as having a lot of interest from parties that were in other jurisdictions. But to think that the eventual winner was Bangkok, Thailand, into Germany, to partner with the Danish group, selling in London was quite amazing to do, and it was all seamless. And I couldn't have been prouder of the team that worked on that and the client for giving us the chance to do that. They were over the moon. And I'm really happy for the company from Thailand that bought that as an opportunity that's already led to more things for them to invest in around the world. So that's probably the one transaction that I think really was at the start and we're quite proud of that being successful.



Anastasia: And do you think any of the kind of change in the way that we're working will continue post-pandemic? Do you think any of the ways that we're interacting now could be a more efficient way of doing it in the future?



Adam: I think it's got to be. I mean, who knows what the future will be, but I think the most important thing is that it's a very personal thing, because I think everyone's going through their own personal experience, and thinking about what does lockdown mean for them? How are they balancing their day with work, home life and other responsibilities, whether it's children, sisters, partners, parents, or whatever it may be. I think it's really, really made us focus on being efficient and very focused, and trying to be very direct, politely direct, but focused, polite and direct in order to be more efficient. There are obviously ups and downs in communication but improving that efficiency and then communicating efficiently is the one thing I think we've all learned about while not being in a “2019 office environment” as the history books may say.



Anastasia: And then switching tracks slightly across Macquarie as a whole, inclusion and diversity is obviously a huge focus. How are we approaching that in MacCap and specifically in the infrastructure advisory team?



Adam: Diversity and inclusion has always been really important I think, from an advisory perspective, because an advisory is where you're trying to give your perspective on a situation and unless you're diverse in your background, your education, your knowledge, everything, you can't give that diversity and balance in advice to a third party. I think even more so, going back to the current environment again, that diversity and the balance of bringing everyone's personal perspective and their approach to work is very important. And so, I think we're very focused and I'm always very focused on diversity and inclusion, in sharing everyone's view, getting everyone comfortable in speaking up about what they think about a situation or not. And that weight of opinion is really important to me.



Anastasia: Infrastructure as a sector has a huge part to play in the climate crisis. Have you observed any sort of shift in our clients’ focus toward sustainable investing and green assets and, more broadly, how is the green energy transition impacting what we do and how we approach asset valuation fundamentally?



Adam: That's always something that comes up, and it comes up earlier and earlier all the time in every situation that we are helping a client either buy or sell an asset. There is always the question, “What are the environmental considerations associated with this business, and the sector in which it's in? Are there risks or things that need to be elevated upfront and brought to everyone's attention on a call that we have?” Obviously, we have our Macquarie Green Investment Group, and within that group you're able to do an environmental audit or a green audit of any situation or company that operates in the world. What we're actually finding is even before we either launch a sale, or even before a client decides to look at a situation, they are now asking us, “Adam can you please get your colleagues that do the green audit to do that audit of the situation, company and opportunity” before they even start to look seriously at it. Just to check if there is anything they need to be worried about. And that could be airport noise pollutions, that can be in relation to just CO2 emissions for any factory, it could be anything. But doing that before they’ve seriously looked at it as almost a compulsory checkpoint is phenomenal. And that's probably over the past 12/18 months that it’s changed, and it’s now something that we will do all the time. I can see that the first and last question, probably on every opportunity we advise a client on, will be “How green is this company, and what are the considerations that we need to be aware of?”



Anastasia: And then for our, perhaps, younger listeners who are looking to pursue a career in the world of infrastructure or financial services, what advice can you give to them? Can you talk us through how you've got to where you are today and share any pearls of wisdom?



Adam: Going back to the nineties when I started, I didn't know what investment banking was, I didn't know what finance was, I don’t think anyone knew. The only thing that was told to me, or as my late father said is “If you get into any organization and end up working with smart people, just keep on asking questions and keep on working hard, and you never know where it's going to end up.” I remember when I told my dad that I got offered a job from an investment bank he even asked, “What's an investment bank”. And I remember saying to him, “I don't know, but there seems to be lots of smart people, and I think they do cool stuff”. And being in Melbourne, Australia, I said “And I think I'll be able to travel the world and that's what I want to do.” So, you know, that was all my mission was. And the other thing I always say to people is that we're always in a rush and when you do start, I know everyone's always focused to go, go, go, go, go, but it's a long journey. Don't try to achieve everything in your first year. Try to really understand things. You won't learn everything straight away, but if you're going to be working for 10, 20, 30, 40, 50 years, you don't have to get to the top by year one or year two. Just enjoy it. Enjoy it, learn more, and ask questions because it's not a race. There are so many people have their CV's laid out for themselves in their mind. You want to become chairman of the organization by the age of 30 and retired by the age of 32. But take your time and enjoy it. Enjoy the people you work with, enjoy making mistakes, enjoy learning from them. And I think that's something I think even more so in the current environment, that everyone should really take a step back and think about that. It's not a race. Enjoy the journey and then you'll have fun. So in summary, what am I saying? It's not about the infrastructure sector. It's not about the one deal you may be doing. It's about the people you work with. And it sounds such a cliché, but it really is. If you don't like the people you work with and say something about it.



Anastasia: Okay and then finally, what do you see for the future of our infrastructure advisory team and Macquarie Capital? What challenges are we going to face? What opportunities are we chasing?



Adam: There are three things that always come out from the perspective of our business. One, the geographic exposure. We always talk about infrastructure and most of the transactions we are doing are still in the UK and Western Europe. We still haven't moved into other parts of Europe. I look at Africa for example. You think about infrastructure, you think about Africa. We do nothing there, our clients do nothing there, but that's going to happen in the future. I look at Eastern Europe, same thing, nothing happens there. I look at, you know, Asia and Turkey and places like that. We've never done any work there so that geographic expansion is inevitable. The second thing is the sectors. We're only just starting to touch on digital, Telco, healthcare and essential services, so that's going to broaden and anything to do with technology is going to broaden. And I think the third thing, like I said before, is the number of clients that keep expanding and becoming either specialist by geography, by sector or bigger. Our client base is growing all the time so if you compare new sectors, new geographies, and new clients, those three things are going to result in things beginning to become bigger and bigger. And so, I worry about whether we have enough people to be able to fuel what's going to happen in the future.



Anastasia: Yeah, it definitely sounds like I'm going to be busy. Thank you so much for sharing that look into your career and the work that we're doing. It was very interesting for me and hopefully for everyone else listening. We look forward to welcoming the next episode in the podcast.



Adam: Thank you very much, thank you for everyone who's listening.



Voiceover: Thank you for listening to the Macquarie Podcast series. For more information, visit macquarie.com to find out where a career at Macquarie might take you please visit macquarie.com/careers.


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