- il y a 8 minutes
The world is entering a new infrastructure supercycle. Are infrastructure assets becoming the next gold rush for investors? And can Europe compete with the US and China?
A high-level discussion featuring Henrik Raber, Global Head of Global Banking at Standard Chartered Bank, Vincent Cuvillier, Chief Strategy Officer at Cellnex Telecom, and David Syed, Partner at Dentons. Interview conducted and moderated by Fabrice Cousté.
A high-level discussion featuring Henrik Raber, Global Head of Global Banking at Standard Chartered Bank, Vincent Cuvillier, Chief Strategy Officer at Cellnex Telecom, and David Syed, Partner at Dentons. Interview conducted and moderated by Fabrice Cousté.
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00:11Hello and welcome to this Smart Emo show edition special edition infrastructure from
00:18the Ministry of Economics and Finance here at Bercy. We are trying to answer this question
00:26is infrastructure the next gold rush or the trillion dollar race we know that from artificial
00:34intelligence and data center to energy networks and transportation trillions of dollars will
00:39be needed to build infrastructure of tomorrow there is a paradox the demand for investment
00:45has never been greater while the challenges of financing geopolitical tensions and economic
00:51sovereignty have never been more complex so who will finance this transformation our infrastructure
00:57assets becoming the new gold rush for investors and can Europe compete with the U.S. and China
01:03to discuss these critical issues I'm delighted to welcome three experts three guests Enric Robert
01:09hello and welcome hello you are global head of global banking a starter chartered bank a word about
01:16eubank thank you we're an international bank we're very much focused on infrastructure across our
01:22network which spans from Asia to the U.S. and we've done some of the leading transactions we're delighted
01:28to be here having this conversation welcome to right after you Vincent Cuvillier hello Vincent
01:37hello Vincent you are chief strategy officer at Sellnext Telecom a word about Sellnext Telecom yeah very
01:42quickly Sellnext Telecom is a telecom infrastructure player a leader in Europe we're present in 10
01:47countries and we're mostly known because we manage finance and manage tower company our customers the
01:54mobile network operators welcome to you and finally David Said hello David nice to meet you thank you for
02:01having us David your partner at Dentons and for the people who don't know exactly who is Dentons sure
02:07Dentons is a large law firm one of the largest in the world very very diverse geographically
02:12and not just geographically also in terms of practices and a lot of infrastructure and financing
02:16around the world yeah and not only gentlemen welcome let's start with the big picture uh with
02:22the first question has infrastructure become the must-have asset class of the decade Henry
02:28I don't think so I think infrastructure has come out of it being a quieter asset class to the forefront
02:35we've seen very strong returns from the infrastructure sector and that's been attracting a lot of new
02:41investors we've sent a lot of new structures that's also delivered opportunities for different type of
02:47investors so I think we've seen a range of banks private credit insurance companies all come together
02:53and financing a deep and very exciting opportunity not a gold rush a steady state interesting sector with
03:01diversified returns yeah uh gold rush or a trillion dollar race what is your your point of view Vincent
03:08look on my side I've always been exposed to infrastructure before transportation now digital
03:13so look I think that's there there are very big fundamentals that we all like no so long-term
03:19visibility resiliency and it's key very exposed to structural trends in my case
03:26well our you have your mobile phone you're obviously consuming data data traffic growth is the
03:32underlying driver and this is part of the day-to-day life so this is like definitely increasingly important
03:37so the broadcast as well of this show is done on the internet uh same question David um about
03:45this new asset class it's true that uh there is a practically zillions of dollars uh spend on
03:50AI on infrastructure and it's it's uh expand every year no that's great and I totally agree with uh
03:57the previous two uh my colleagues here you know infrastructure is not something new but it's
04:02something that has accelerated over time accelerated and taken more visibility it's more visible today
04:08and I think really the core question whether it's zillions or trillions or multi-billions uh that's
04:15not really the issue it's how do we actually give the world's population the services and access
04:23whether it's to data whether it's to sanitation whether it's to very simple things like uh housing
04:30uh transportation and that I think is really the core uh driver of this infrastructure uh zillion
04:38dollar question as you say it's getting people what they need globally I think maybe to add one more
04:43point infrastructure is also real asset finance these are real assets that exist whether it be
04:50property building infrastructure cement very much different to so-called paper asset classes we're
04:58talking about real asset finance which is here for a long period of time giving good yield so
05:04I don't think we should conflate market exuberance versus real asset finance now it's really that
05:11uh compared to other exotic asset classes such as uh cryptocurrencies for example or we remember
05:18about the nfts you remember the the monkeys image of the g but the monkeys nobody knows and it's uh
05:24it's
05:25vanished uh it's true that it's it's real and for the future and for the the decades this is a
05:30kind
05:31of investment yeah on that let me let me react because you discuss crypto nft but there is something which
05:37they all have in common that behind that there is a big in this case digital infrastructure so the
05:42digital infrastructure and I insist on that because we need to plan it 20 years in advance if today were
05:49today in paris if today there is a very good fiber rollout this is something that not started five years
05:54ago and there has been in this case very political political willingness it has been started like 10 15 20
06:00years ago and so the question is in this case digital infrastructure is very important but for me and
06:07for us that's something the real question is what is the infrastructure we'll need in 10 or 15 years
06:12and just to give you like two two figures you know so I said it the underlying driver of my
06:18industry
06:18is the data traffic growth it will double in the next five years it will be at least time three
06:25time
06:25four in the next seven eight nine years so how we plan that I think this is for me the
06:31clearly the
06:31the key question and the second the gsma gsma is the telecom lobby they get they gave a number say
06:39in the mobile industry to have good mobile coverage in europe we need almost 500 billions by 2035
06:47and they are short of two 200 250 billion so we need this is linked to european competitiveness we need
06:54way bigger digital infrastructure do you think there is a bottleneck at some point in investments
07:01i think the bottleneck is is at various levels one is making sure that people can work together to
07:07meet these requirements because they're just too big for any one category of actor to deal with so this
07:15collaboration issue is key how to bring together capital of different types of capital private capital
07:21multilateral capital bilateral capital uh you know all of that has to work together because it's a very
07:27very large requirement and and and what the 500 billion for telecom i mean you can take ports you can
07:33take airports air traffic you can take any type of connectivity any type of connectivity and you're
07:40gonna you're gonna get the same types of numbers huge numbers so i think yeah i think the issue is
07:44working
07:45together and streaming and also project preparation projects have to be properly prepared and properly
07:51brought to market because for these capital to meet the demand the demand has to be in a in a
07:58shape
07:58and in a form that actually can be financed that's also a big issue and well i think that's quite
08:04interesting historically capital may have been a constraint in infrastructure that is not the case
08:10today where we've seen transaction size of a 40 or 65 billion in the united states for single asset
08:19financings whether that be around gpu finance or data center fence so the capital there i also think the
08:26capital is very much also in europe and ready to go so it's a function of deploying that capital and
08:32then
08:32it comes down to the execution of the transactions and the execution of the products now in infrastructure
08:39we'll most part we're building something or we're creating something that many times needs planning
08:45permission or other permits or requirements so we think the capital is there i think the industry is
08:51ready to go it's very much a team sport we're doing across the capital structure so now it's about
08:56how the ability to deploy at scale and at pace uh about financing uh we know that we need uh
09:04trillions of
09:05dollars or euros for tomorrow's infrastructure can banks still take the lead or private investments
09:12funds are needed as well uh both are needed so it's not one or the other it's both are needed
09:19banks
09:20are very much at the center of the financing ecosystem around infrastructure that can be anything
09:26from your simple cash accounts all the way through to complex project finance but also the private
09:32credit and insurance companies are very much needed so to scale this and to leverage to provide the
09:38capital that's needed in the current backdrop also with banking rules and regulation you need everyone
09:44to participate and the good thing is financing technology is now dividing the capital structure in
09:51a way that everyone can participate in the same deal relative to their risk tolerances and their returns
09:57yeah vincent about this uh this topic of uh private debt or private investments and uh normal banking
10:05system we need both as uh just say the henry without any doubt i think the the mistake we may
10:12commit
10:12also and i'm i'm putting a another concept on the table is around the sovereignty no so when people
10:18talk about sovereignty okay so it should be our money our technology our infrastructure uh i tend to disagree a
10:25but i think that because the needs are massive of course there's capital in europe but we need
10:30capital from outside europe of course technology in europe is good but we also need the technology
10:36from outside so i think what we should procure is we need selling solicited companies so we have the
10:42equity markets we also have a bond order markets we partner with private equity firm with bank in some like
10:48specific project but i think that the key thing is we need to have very strong european players
10:55that do understand that of economical scale and then can partner with all type in this
11:00scale financing technology providers david you talk about preparation of the these macro deals
11:06financing is a big part of it financing is a key part of it and financing is completely
11:11linked to the project preparation and the collaboration between the technical between the financial
11:17um between the um governments because you need permitting you need access depending on the type of
11:25infrastructure so actually putting all that together and making it bankable financeable is a key element
11:31obviously yes just if i made to react on different type of sources of funding no so when we discuss
11:39about governments government incentive is not necessarily i give you money today it can be very
11:44other other forms i give you an example in our industry in the mobile industry you know that the spectrum
11:51is something that it's it's very scarce it belongs to the government so the governments they have two
11:56ways either i want to cash in and i do an action and i have a plenty of money or
12:00i have a very strong
12:01industrial let's say vision i say guys i let you use the spectrum but in actions i oblige you to
12:07invest
12:07for the coming 10 years so there's also a way on the financing in this case on the public financing
12:13public incentives to do different in order to make like the the sector being more let's say more in
12:19investment friendly no other examples standard chartered bank has partnered with apollo uh in a 3
12:26billion uh financing initiative um is this the financing model of the future of the future to unlock
12:32more private capital and fund infrastructure development we believe it's uh very innovative
12:39and we also believe it's part of the financing ecosystems for the future so yes we've done a partnership
12:46with apollo and we have announced one this morning called the european credit company where we're
12:51coming in specifically into a new vehicle that is focused on investing in european assets and within
12:58that is going to be real real estate and particularly also infrastructure so strong focus on infrastructure
13:05the fund has several investors and be upwards starting of 10 billion of capital we also think that
13:11europe is a good time now to start investing there's a lot of opportunity around the projects coming
13:17and it's also quite a wide range of projects i've mentioned also previously we need to be careful that
13:23there's not too much crowding out maybe in the ai sector a lot of investment going into specifically ai
13:30gpu finance but infrastructure is a huge area including telcos towers infrastructure fiber etc it's a very
13:40wide network and we need to make sure that we're somehow the pendulum is in the middle capturing all
13:45the infrastructure because we do need ports we need roads and airports as well um about geopolitics uh we
13:53know that uh geopolitics is reshaping the the global investment uh landscape we talk about national sovereignty
14:00trade tension energy transition um can europe come out ahead in this context so i totally agree that europe
14:08is uh a very large player a very important player for its own needs as well yeah in all categories
14:14of
14:14infrastructure but it's also a global player it's a provider of capital it's a provider of technology
14:18so i think europe has a key role to play europe has to collaborate europe has to plan ahead very
14:24very
14:24important the planning and europe also i think is a in in some ways it's a it's a mediator between
14:31maybe
14:31the us and other parts of the world where europe has a more a more long-term approach in certain
14:37areas
14:37and can actually finance some of these more critical infrastructures in africa in central asia
14:46and in south america where maybe the us is still through gfc and other is still finding its way because
14:53it wasn't a priority until you know recently okay vincent that mean also that europe is not squeezed or trapped
14:59between china and us no i don't think so look and especially even it's not necessarily my sector
15:06per se but you can see the data center for instance you have many people coming to europe now attracted
15:12by the the european quality energy prices diversity of sources etc i think what we need to really have
15:20is this vision no what is the europe digital agenda what do we want by 2035 recognizing that this is
15:27part
15:27of the competitiveness recognizing that it is good to have low prices to consumer but when you have
15:34low prices you cannot invest in your infrastructure so we also need to make choices i think in this
15:39respect and as i said we are a big european player present in 10 countries having said that when i
15:45want
15:46to make an acquisition a country i need to go to the local regulators so i have like 10 times
15:51in my case
15:51like i'm limited 10 10 times so i think that we need to look for the global economies of scale
15:57this
15:58business is global i mean yeah when we discuss about like satellite there are global industries so we
16:05need to be more global we need to be more european and i think on that uh i mean there
16:11there are good
16:11ways to be optimist not because today you you had like these dry reports there is a real i don't
16:17know
16:18willingness so there is a vision now we need to execute and of course we're european so we will
16:23be discussing among countries yeah but this is what we need to do we need to look at the at
16:27the length
16:28of europe but based on your experience you know uh we are celebrating today well this week the 10 years
16:33of infra week uh of these events yeah that's your euro place in 10 years do you think it's uh
16:39easier to
16:41do business or it's more difficult with all the regulation that we got in europe or is better what do
16:46you think
16:46look i can share if our experience i thought this is the birthday 10th of infra week just for you
16:53to
16:53know cell next arrived in france 10 years ago but in in july 2016 and we have invested since then
17:0014
17:00billion euros were one of the largest foreign investor here in france i have to say we have always been
17:07well um they liked us from since the very beginning uh of course we went through the different processes
17:16fdi for indirect investment antitrust but we always could explain our european story so i wouldn't say
17:22it's more complex now than 10 years ago because in our case well we have been well received for for
17:28the
17:28last 10 years and and of course what we want is predictability to be able to keep investing for the
17:33next 10 years i mean capital and innovation are global and they will go where there's the highest
17:41return or where there's the biggest opportunity so in some ways i'm not sure there's much choice
17:48where reform or change is needed the market will probably push to make that happen and we're moving
17:54at such pace now that the ability to hold back innovation or capital flows is it is going to be
18:01very
18:01difficult and i think there's great capital flowing into and out of europe there's a huge amount of
18:06innovation and i think what's going to be a next really interesting area of infrastructure finance
18:13is space finance because that's the next thing on the agenda so satellites europe has already been a
18:20leader in some of these areas for many many years decades and space finance i think you're going to hear
18:25a lot more about the next five to ten years is it still time because there is a big competitor
18:31with with spacex recently uh quoted there's there's one big competitor but there's also lots of smaller
18:38companies are probably not as well known to everyone or the audience but it's a competitive field there's
18:44a lot of people doing rockets and other things but it's not only about the actual launching it's about the
18:50whole ecosystem it's about everything that goes into the satellites the cables the panels setting
18:56up the launch platforms everything around it is a very exciting place to be investing you know it's the
19:02same also around telco space actually what goes into these uh projects is as exciting and europe has
19:10leading companies who provides the data as the platforms inside data centers who've done incredibly well
19:17so banking that infrastructure we find as a network bank as exciting as a project itself yeah sure uh
19:24just coming back to the regulation david you are at the core of the system or lawyers we need that
19:29to
19:29to be sure that there is no trap they avoid traps no i think i think europe has understood that
19:34it has to
19:35be competitive both in terms of regulation in terms of access to capital in terms of the global gateway
19:41system that's put in place for global you know global infrastructure projects prioritizing i think europe
19:46has understood it i mean it's a constant competitive process because we're working with within a global
19:53architecture and a global framework clearly but i think europe actually has woken up to the fact that
19:58it has to be competitive fast decision-making prioritized etc one thing i would just add however
20:04i think that europe has another thing which is that infrastructure can unite us or divide us right
20:10and i think europe understands that europe has always had a a a good balance i think between
20:16public infrastructure right which allows everything else to happen and private infrastructure which is
20:22where the money goes and where the returns are right so i think europe really has that secret sauce
20:28that has sometimes it's gone too much one way or too much the other way but i do think it's
20:32something
20:32that europe has which is a competitive advantage yeah so but this secret sauce uh sometimes a bit sour
20:36because we say that uh we're obsessed by the by the risk and then uh europe is maybe a bit
20:41cautious
20:42let's say about ai for example we we um we make regulation before investing and uh we're a bit cautious
20:48about that the danger uh the contrary us is expanding now i didn't say europe is perfect i think europe
20:55is far from perfect i would be you know really really hesitant to say that europe is perfect but i
21:00think europe
21:00does have a lot of competitive advantages the question is harnessing those and understanding
21:05them and bringing them to the market but i do think that secret sauce is something that we should
21:10preserve yeah sure uh vincent no maybe just to react because this is why i started when we started
21:16our interview saying like what europe needs again in my sector in the europe in 10 years now because
21:22in order to take the good decision today you need to understand where you want to go in 10 years
21:25i think there is something if everybody agrees that these networks needs to be two times three times
21:32four times bigger then you take certain decision certain decision is we cannot sustain to have four
21:38competing networks in a national country like france where they're like i don't know 60 million now so
21:44there will be three but which is logical and and and these these are our customers which could be
21:48illogical that you have a partner saying yeah i should have my customer merging but why we say that
21:53because we're convinced that the networks needs to be i don't need four networks of medium size i need
22:00three medium of big size three networks of big size and this is so then you can have efficiency in
22:06the
22:06system you have long-term commitments you need to share the infrastructure and i think this is very
22:11important because we made a mistake sometimes by saying that we want to have competition on the
22:17infrastructure what happened is like people have been duplicating infrastructure that were not necessarily
22:23useful and i think this is what we need to remove so we need to have bigger networks sharing as
22:30much
22:30as we can because we cannot tolerate to have inefficiency in the system enrique i got a tough
22:35question for you the banker uh infrastructure is often presented as a resilient and a profitable asset
22:42class which is true so far uh but we see the valuation soaring and this question is aren't investors at
22:49risk of overpaying for assets that may ultimately deliver disappointing returns such as ai maybe too
22:57many capacities today and in the future we don't know i think it's a very broad question and there are
23:02many different asset classes so obviously in some of the equity markets we've seen a very significant
23:09rise in values in a short period of time a lot of that has been based on supply and demand
23:15dynamics
23:16so if you see the balance sheets of these countries they have very long order books particularly when
23:22it comes to the memory space etc you've seen what's happened to the korean equity prices but i think you
23:28need to be measured i mean in the debt space and a lot of what we talk about in core
23:32infrastructure the
23:33valuations continue still to be very attractive they're long-term investment assets with double-digit
23:40returns so we have a lot that goes on on the uh sort of this uh the news media channels
23:45about volatility
23:46and markets particularly the past uh five weeks but i think we need to think about the long-term future
23:52that this is really a generational change in technology that's coming and there will be some winners
23:57and losers within that but generally it's going to provide a lot of prosperity and really good investment
24:03opportunities so it's just like any other i think investment asset class just need to pick the
24:08right players in the segment no it's raised the question of the bubble you know ai bubble for
24:13example uh like the internet in years 2000 uh too many investment at the same time at the same place
24:20well i'll say the same i think one difference and what colleagues can answer is there's underlying
24:24demand here that is built these you know there is demand for these uh data centers for these chips for
24:32the racks for the electric cables power etc there's a long order book of predetermined demand from
24:40incredibly strong companies who are big balance sheets who are already giving their cash flows in
24:46advance which is a bit different to sort of a pet store company that might have not had a lot
24:52of
24:52future sales on the order book and some challenges around the quarter but telco is in the epicenter of
24:58this and there are huge order books with strong cash flows vincent remember of course this uh this
25:05period of time until year 2000 where we uh we forecast maybe too much in advance what uh what has
25:12been
25:12gone in uh in 2010 yeah but but i think in this case we're talking about the infrastructure so i
25:19mean
25:19there is a strong underlying assets that we shouldn't forget this is point number one point number two
25:25let me make a comment which is very generalist but like in any investment if you don't make a proper
25:32due diligence you don't look at your downside case you put too much debt and you you forget to have
25:37a
25:38downside case in your operational plan so i think this this happens what what we must make sure
25:43is we keep being very disciplined in the way we invest and i think this is uh it's a basic
25:50principle if
25:50i may but i think this in this moment where sometimes the work is crazy like to be basic is
25:55is a quality okay david we talk about due diligence is your field uh it's completely true so i totally
26:01agree i totally agree it's all about i go back to what i said about project preparation which is having
26:07clarity as to the demand clarity as to the financing clarity as to where the market is going to the
26:15extent possible obviously there's the technology uh you know obsolescence etc etc so i think all of that has
26:23to be taken into account it's teamwork right um because it's not just one uh it's not like due
26:28diligence on a real estate deal where do you have the permits and has it been properly built it's
26:34much more complex but it's perfectly uh within our capacity to do it but i think that's the key
26:39making sure that the majority or the vast majority of projects is properly financed properly prepared there
26:45will be mistakes on the way obviously um yeah obviously uh last question uh very quickly uh best
26:52investment opportunities for you uh i think vincent you would say maybe tell telco no look in our case
27:00we're convinced we need more towers we are this is of course it's our co-markets and this will be
27:07needed
27:07so obviously we need to create as an industry to create the condition that any investment as the proper
27:13return investments that we need not to duplicate assets we need to be extremely efficient we need
27:19to share the infrastructure and i think this is for us clearly the the best investment opportunities and
27:24and of course maybe sometimes in history now is the time a bit to to make the the market more
27:31efficient this way there are consolidation but this will be done in exchange of way bigger network
27:35in the future and rick you told us about space uh space i think it's very interesting i think the
27:40challenge there is there's not a huge amount of investment opportunities today for everyone to
27:45get involved i think more generally i think the private markets in the debt space on real asset finance
27:52we're getting incredibly strong companies for two to four hundred over i think that's a really
27:58interesting place and that's something you can hold for 10 years and you have good returns and david so
28:03i totally agree and i'll just go back to more you know nuts and bolts stuff like uh lng carriers
28:09i mean
28:10uh or an fpso i mean try and order one today and get it before four or five years right
28:15so these energy
28:17also is a critical factor here because you need to power all of this so it's a it's a it's
28:22a value chain
28:23and everything is interdependent uh but i think the the at the forefront is population and demand right
28:30they're the the the world's population people us are looking for high speed internet they're looking
28:37for uh travel opportunities they're looking for amazing hotels to go to for leisure so i think the
28:43whole uh space is is extremely vibrant and there's a lot of opportunity okay thank you gentlemen for this
28:50very uh thank you very much roundtable and this discussion uh thank you henry graber standard charter
28:56bank vincent cuvidier sellnextelcom and david say dentons thank you and see you soon thank you thank you
29:02thank you