Infrastructure stands as the silent guardian of our modern society, orchestrating the delicate dance of our daily routines and powering the metropolises in which we live. Yet, behind the scenes of this vast network, there’s a fascinating interplay of finance and strategy, primarily steered by the world of Infrastructure Private Equity. To shed light on this intricate domain, we sit down with Mr. Riddhish Rege, a luminary in the sector, to delve into the past, present, and future of U.S. Infrastructure Private Equity. This conversation promises to be an enlightening journey, offering a rare window into the forces molding the very framework of our urban existence.
The Chicago Journal: Welcome, Mr. Rege. Could you give our readers an introduction about yourself?
Riddhish Rege: Thank you for having me. I am an Infrastructure Private Equity professional based out of New York, focused on investing and asset managing Infrastructure investments across the U.S. Over the past decade, I have been deeply involved in the U.S. Power and Infrastructure sectors through M&A, Capital Markets, and more. I started this journey as an Investment Banker and working with reputable institutions like TD and J.P. Morgan.
The Chicago Journal: That’s an impressive track record. How did you get into Private Equity?
Riddhish Rege: It was a natural progression for me. I originally started my career as a public accountant based out of Mumbai, India, auditing large scale infrastructure projects that got me interested in the sector. After my graduate education at Brandeis, I joined J.P. Morgan as an Investment Banker focusing on credit underwriting to the Power & Utilities and the Hedge Fund Industry and slowly started working on a whole gamut of financial transactions such as restructuring, M&A, capital markets. Having worked on a great deal of transactions, I realized the transformative power and actual change I could execute by being an Investor and helping shape the direction of portfolio companies and Private Equity felt like the best fit for me, especially in sectors like Infrastructure that need long-term investment and vision. The chance to play a role in shaping the future of U.S. infrastructure was too good to pass up.
The Chicago Journal: For those unfamiliar, could you explain what Infrastructure Private Equity is? And how does it fit into the Infrastructure Landscape?
Riddhish Rege: Certainly. Infrastructure Private Equity refers to investments made in infrastructure assets or companies, typically with a long-term horizon. Unlike traditional Private Equity, which often targets a broad array of companies in various sectors, Infrastructure Private Equity targets essential infrastructure like transportation (airports, toll roads), utilities (power, gas, water), communications and renewable energy. It’s an essential part of the infrastructure landscape because it provides the critical capital needed to upgrade, maintain, or even build new projects. Think of it as the financial muscle that pushes many of such projects you see around.
The Chicago Journal: How are Infrastructure Businesses run, and why are they so critical to everyday life?
Riddhish Rege: Infrastructure businesses are the backbone of our modern society. They provide essential services like power, transportation, water, and more. They are run with a focus on long-term sustainability, reliability, and public service. Without them, our daily lives would come to a standstill—no electricity, no clean water, no transport. Their importance cannot be overstated.
The Chicago Journal: What do you believe makes Infrastructure an attractive asset class for private investors?
Riddhish Rege: Several factors make Infrastructure an alluring investment for private capital such as stability and predictability of cash flows backed by regulations and long-term contracts, Inflation-hedge as essential services are sticky in nature i.e. customers will always need and be willing to pay for such assets, high capital and regulatory constraints making it a difficult sector for everyone to enter and finally having the ability to partake in the impact created by such infrastructure projects on society and communities around which they are built
The Chicago Journal: Given their significance, how does the government support such companies in building out Infrastructure?
Riddhish Rege: The government plays a pivotal role through various legislations and policies. For instance, the Infrastructure Investment and Jobs Act of 2021 and the recent Inflation Reduction Act of 2022 have laid the groundwork for increased investment in Infrastructure. These acts provide financial support, create a conducive environment for investments, and ensure smoother regulatory processes. Asides from the Federal level, State and Local level agencies, regulators, and organizations play a greater role in the execution of the larger vision. More so that one could imagine, as they are best placed to draft suitable policies, approve or deny mandates, disburse funds for grants or reimbursements and maintain long-term plans for their jurisdictions. A company’s success is very much dependent on how the local body sets its rules and executes on them.
The Chicago Journal: And what is the final outcome that these companies aim to achieve?
Riddhish Rege: The ultimate goal is multifaceted. It’s about providing reliable and efficient services to the public, creating jobs, ensuring a sustainable and green future, while at the same time offering returns to investors. In essence, infrastructure companies aim to lessen the burden of construction, operation and management of local infrastructure from the government and help hopefully help build top-notch projects.
The Chicago Journal: With your deep insights, what are you currently observing in the market?
Riddhish Rege: The U.S. infrastructure space is witnessing a transformative phase. There’s an increasing emphasis on green and sustainable projects, and technology is playing a pivotal role in modernizing existing assets. Private equity, with its long-term vision, is perfectly positioned to leverage these trends.
The Chicago Journal: Lastly, how do you view the evolution of Infrastructure Private Equity as an Asset Class going forward?
Riddhish Rege: Infrastructure Private Equity is poised for significant growth. The ever-increasing need for modern Infrastructure, coupled with government support and the push for sustainability, means there’s a tremendous opportunity. Additionally, Infrastructure Private Equity can free up government resources, which would otherwise be funded by government debt, which is at historical levels. I believe we’ll see even more innovation, collaboration, and investment in this sector in the coming years as the government opens up for P3 projects. Finally, I believe we will also see more integration of technology and infrastructure being more tech-savvy.
The Chicago Journal: Thank you, Mr. Rege, for sharing your valuable insights with us today.
Riddhish Rege: It was a pleasure. Thank you for having me.