🎥 Stonepeak's Luke Taylor - what it takes to be a great infrastructure investor

Welcome back to the Alt Goes Mainstream podcast. Today’s episode dives into the evolution of infrastructure investing with the leading scaled specialist firm in infrastructure. We sat down in Stonepeak’s Hudson Yards office with the firm’s Co-President Luke Taylor to discuss the inner workings of the infrastructure investing world and unpack the story of how Stonepeak’s rapid ascent has seen the firm climb to $76.3B in AUM in 14 short years. Luke brings a wealth of experience to the infrastructure investing world. He is Co-President of Stonepeak and a member of all of the firm’s investment committees. He’s been investing in infrastructure for over 20 years, joining Stonepeak from infrastructure investing pioneer Macquarie Capital. Luke and I had a fascinating and thought-provoking discussion about infrastructure investing and why it’s becoming an increasingly important part of the private capital ecosystem. We covered: * How Luke went from growing up on a sheep farm to investing in infrastructure in New York. * What Macquarie taught him about how to approach infrastructure investing. * Why he took the entrepreneurial leap to build Stonepeak and join Chairman, CEO, and Co-Founder Mike Dorrell from the firm’s earliest days. * Why infrastructure investing is more than toll roads, airports, and bridges. * How there are elements of a private equity approach to investing in, building, and operating infrastructure assets. * Where infrastructure fits in an investors’ portfolio. * Why individual investors should consider exposure to infrastructure assets. * Has infrastructure proved itself through an inflation cycle? * Why scale matters in infrastructure investing. * How Stonepeak identified investing in data centers early on and well before the data center boom began. * What type of demeanor and mindset makes for a successful infrastructure investor. Thanks Luke for coming on the show to share your expertise, wisdom, and passion for infrastructure investing. Thanks for reading Alt Goes Mainstream! Subscribe for free to receive new posts and support my work - writing and podcasting about the convergence of private markets and private wealth since December 2020. Clip #1: What does it take to be a truly great infrastructure investor? Clip #2: Driving value creation in infrastructure investing. Clip #3: Infrastructure as a defensive investment. A word from AGM podcast sponsor, Ultimus Fund Solutions This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency. To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products. Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at [email protected]. We thank Ultimus for their support of alts going mainstream. Show Notes 00:00 Introduction to Ultimus Fund Solutions, our Sponsor 01:18 Welcome to the Alt Goes Mainstream Podcast 02:04 Guest Introduction: Luke Taylor 02:45 Luke Taylor's Background and Journey 04:52 Early Days at Macquarie 05:47 Entrepreneurial Spirit at Macquarie 08:13 Building Stonepeak 10:37 Value Creation in Infrastructure 12:28 Mindset of an Infrastructure Investor 13:38 Balancing Long-Term and Agile Thinking 14:23 Key Skills for Success 16:20 Underwriting and Risk Management 16:48 High Barriers to Entry 19:36 Operational Intensity and Value Creation 22:51 Network Effects in Infrastructure 24:19 Defensive Position of Infrastructure 24:49 Infrastructure in Private Markets 26:37 Inflation and Infrastructure Performance 27:28 Portfolio Construction and Infrastructure 28:33 Productizing Infrastructure Investments 29:01 Equity, Credit, and Real Estate Strategies 30:51 Thematic and Opportunistic Investing 31:23 Early Investment in Data Centers 31:32 Entrepreneurial Staff at Stonepeak 31:36 Identifying Investment Opportunities 31:45 Exploring Data Centers 32:11 Challenges in Data Center Investments 32:34 Discovering Interconnection Hubs 33:11 The Role of AI in Data Centers 36:14 Downside Protection in AI Investments 36:28 Underwriting AI Thematics 36:49 Capital Needs in AI and Data Centers 38:40 Navigating Increased Capital in Infrastructure 40:38 Scaling Stonepeak's Infrastructure Investments 41:16 Diversification in Infrastructure Investments 42:26 Competition in Infrastructure Investments 43:58 Developing an Edge in Origination 44:35 The Role of Structure in Deal Sourcing 45:23 Evolution of Infrastructure Investment Space 45:57 Building New Infrastructure Assets 46:09 Exits in Large Infrastructure Deals 47:03 Evergreen Funds and Long-Term Holdings 48:49 Stonepeak's Wealth Business Strategy 53:56 Challenges in Starting a Wealth Business 54:29 Importance of Deal Flow 56:35 Navigating Volatile Markets 57:03 Risks in Infrastructure Investing 58:10 Future of Infrastructure Investments Editing and post-production work for this episode was provided by The Podcast Consultant. Join over 12,600 Substack subscribers & followers who are thought leaders and executives from top private markets firms and wealth management like Blackstone, Apollo, Ares, KKR, EQT, Carlyle, Blue Owl, CVC, TPG, Brookfield Oaktree, Vista, Goldman Sachs, J.P. Morgan, BlackRock, Fidelity, iCapital, Franklin Templeton, Nuveen, Hg, Permira, Stonepeak, Hightower, Focus Financial, Cerity Partners, and more. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit altgoesmainstream.substack.com