00:00They were just talking about, you know, India and perhaps also that is along with some of the markets in the Asia region that you seem to be more constructive or positive on.
00:12But how do you view that along with China at the moment?
00:16OK, well, look, I would probably want to start with the fact that for Macquarie, we've been investing and operating in Asia for more than 30 years now.
00:24So we're very familiar with the overall landscape.
00:26OK, our job is to create a diversified portfolio.
00:31So obviously we think there are great opportunities overall, particularly given the positive demographics in this region.
00:37If you look at some of the economies in Asia, they're one of the fastest growing economies in the world.
00:43So some of the statistics you'd be very familiar with by 2030, two thirds of the middle income population globally will come from this region.
00:51So when we look at each of the markets, Asia is not very homogenous.
00:55We have to really look at each country based on the maturity of their political regulatory landscape.
01:03You mentioned India.
01:04We're also very familiar with markets like Southeast Asia.
01:07So within Southeast Asia, we've invested in digital assets, energy assets, transportation assets in places like Philippines, Indonesia as well.
01:16And we've also exposed ourselves to more developed markets like Japan, Singapore, as well as Korea.
01:23And to your question about China, we've been committed to China for a very long period of time now.
01:29We've been present in that market for more than 20 years.
01:33We've got quite a lot of existing portfolio companies in data centers, in logistics, as well as water infrastructure investments today.
01:41And so we're very focused on driving value and growing those existing portfolios.
01:46Are you looking to deploy even more capital in China?
01:51Look, as mentioned, you know, our job is to really find the best risk adjusted return opportunities in the current environment.
01:59So I think the key thing for us is we understand and appreciate that emerging markets change rapidly.
02:06But for us, we've got people on the ground, that local capability and experience such that if there is a great opportunity to pursue, then we'll be ready to go.
02:16OK, you cite Indonesia and the Philippines, and these are markets where you've had a long sort of history in.
02:25But they've been quite tricky to play this year as well.
02:29Like, how convicted are you on those markets?
02:31Yeah, I mean, look, this is not an overnight journey that we've been on.
02:36I think we've been really first movers into markets like Philippines as well as Indonesia.
02:42So if I take Philippines to begin with, we started investing in that market since 2012.
02:51And it took us actually 12 months, a whole 12 months, before we even deployed any capital in that market.
02:58But, you know, we saw and had quite a lot of conviction, again, on the macro dynamics.
03:04The fact that we could leverage not only our regional capabilities, but our global experience in infrastructure to help the Philippine government to deploy their infrastructure program at that time.
03:16And we've been quite successful there.
03:18We've deployed more than $2.5 billion of capital in that period in assets like the largest geothermal portfolio in the Philippines.
03:25We've participated in their first PPP with the light rail, as well as a variety of renewable assets.
03:33To your question about Indonesia, yes, we've all seen the headlines and a lot of noise around Indonesia in recent times.
03:42And, look, as I mentioned, our job is to really understand the environment that we're playing in.
03:48I mean, Indonesia, it took us longer than Philippines to enter.
03:51It took us more than 15 years, I would say.
03:54We obviously monitored that market closely because of the positive demographics.
03:59But it was only when the political and the regulatory framework made sense to us.
04:04It was a lot more stabilised.
04:06We were very confident with some of the partnerships that we were developing.
04:09So you remain confident on the stability in government policy coming out of both of these markets?
04:15I think on a, you know, we always look at these things on a more medium to long-term basis.
04:20We don't really try and focus too much on the short-term volatilities and short-term shocks.
04:26If you think about infrastructure, we look at these on a very long-term horizon.
04:30So we're still very optimistic that things will get better there.
04:34Talk to us about the gap in infrastructure investing in Asia that we've talked about, like, almost to death, right?
04:40What have you been seeing in this year alone and how do you accelerate capital flows towards that?
04:47Yeah, I mean, you're absolutely right.
04:48We've been talking about how that funding gap continues to widen and how do we actually close that gap.
04:55Look, I've been in Asia for almost two decades now, personally.
05:00You know, when I first moved to Singapore, there wasn't as much interest in investing in infrastructure or that capital flow here.
05:07But if I look at the market today, there are quite a lot of players who've now entered into this market.
05:13And what's interesting right now, given the current macro situation, we're seeing a lot of investors interested in diversifying away from markets like the U.S. and coming into Asia.
05:23I think overall that's good, right, because that just helps us reduce or, you know, reduce that funding gap that, you know, continues to widen because of the constant growth that you're seeing in Asia.
05:35What about fundraising for your infrastructure fund?
05:38At last count, I think the goal was $5 billion.
05:42Correct me if I'm wrong.
05:43How's progress on that been?
05:45We're always trying to raise capital to, you know, provide these solutions and access to these proprietary opportunities to investors.
05:53Fundraising environment has somewhat been up and down in recent years.
05:58But, you know, we're making good progress.
06:00Okay. Talk to us as well about some of the other opportunities in infrastructure investing, because I know you're also a big player in markets such as South Korea, where AI, the energy transition are key themes.
06:14But it also looks like it's becoming a competitive landscape.
06:18How does that affect what you're targeting and your exit strategies?
06:22Yeah, no, that's a very good question.
06:24So, look, I think our core principle when it comes to our investment strategy is to go into things early.
06:33So, as mentioned before, we've been first movers in all of these markets.
06:38When we've gone into sectors early, built conviction around that asset class, think about really how we're going to create value during our ownership.
06:47It's been a pretty great experience for us.
06:51And then the obvious step is how do you actually exit and maximise on the way out to the next logical buyer.
06:56The competition that you talked about and the capital flow that you talked about, I think what we're seeing is that the mix and depth of the universe of buyers is much greater than what it was even five, six years ago.
07:07So, that's really helping us run these competitive processes on divestments and really making sure we're hitting that intrinsic value on the way out for some of these assets.
07:17Do you talk about value?
07:19There's been bubble talk for data centres.
07:22I mean, how would you weigh out the risks?
07:24Well, I'm sure you're aware we did have a very large hyperscale portfolio in the region called Air Trunk not long ago.
07:32We divested that asset to another investor late last year.
07:38Again, I think, you know, we're highly convicted on the sector.
07:42You know, data centres isn't the only asset class within the digital infrastructure space.
07:47You've got things like communication towers as well as fibre businesses that we continue to review and pursue.
07:53I think for us, you know, the reason why we divested that investment was because, again, to the point about going in early, maximising on our valuation creation plan and then thinking about what is that next phase for that asset created that opportunity to exit.
08:08But overall, I think, you know, we have strong conviction in the sector.
08:12We haven't really been talking enough about developed markets in Asia, in Japan, where corporate governance has reinvigorated investor appetite for that market.
08:24What are you seeing in terms of the opportunities there, particularly for private markets?
08:29Yeah, I mean, the first thing we did was really strengthen our teams on the grounds there.
08:34I think we still believe that is critical to create these proprietary opportunities.
08:39So we've got a pretty strong, large team now on the grounds in Japan.
08:44The corporate mindset has definitely shifted to your point about these policy changes in recent periods.
08:50They're very focused on maximising efficiency, value and productivity in that country.
08:56So, you know, that's really led us to our first digital investment opportunity late last year, where Macquarie supported Rakuten Mobile in its growth journey.
09:07And that's been a good investment to date.
09:09And I think that will open doors for us further in Japan.
09:11Aside from Gove, I have to ask you, because Macquarie is also, you know, facing regulatory scrutiny, the shareholder revolt.
09:19There have been internal changes.
09:21How are you assessing that?
09:22What are your views on that?
09:23Look, I think, obviously, assessing risk is part of what we all do.
09:28So it's important that that's embedded in what we always do.
09:32Things like regulatory, political risk, government risk is something that's not new for our teams, particularly here in Asia.
09:40Because if you think about how rapidly Asia has been evolving and how consistent that change has been,
09:47I think dealing with some of those risks is something that we're very familiar with.
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