Delivering clean electrons and molecules in the race to decarbonize wields immense pressure. Opportunity demands are felt by all companies in the supply chain including those in funding roles. Financial market leaders must identify the right investments and then boost value. In this episode of Power Players by Origis®, David Vence, a partner with Antin Infrastructure Partners, joins Michael Eyman of Origis Services to discuss Antin’s assessment model, its view of value creation and the specific tools leaders can implement to build company value.
David Vence is a partner with Antin Infrastructure Partners in its New York office. With a global education focused on statistics and financial math, most recently from Stanford University, David brings a decade of financial market experience to his work building portfolio company value. As leading private equity firm focused on infrastructure investments, Antin acquired a majority stake in Origis in 2021. Since then, David has focused his expertise on driving value creation for Origis.
With twenty years of leadership and operations experience, Managing Director Michael Eyman ensures that Origis Services’ rapidly growing solar and energy storage portfolio delivers results to owners and communities.
Antin is a private equity fund focused on infrastructure investments. The firm has over €30 billion of assets under management, invested across Europe and North America.
“Our strategy is to uncover investment opportunities that benefit from long-term market trends, have passed what we call the Antin infrastructure test, have demonstrated a certain degree of complexity and have a clearly identifiable value-creation potential,” explains Vence.
The five-part Antin infrastructure test targets companies that 1) deliver an essential service to the community, 2) exhibit strong barriers to entry, 3) have some cash flow predictability, 4) display robust downside protection and 5) exhibit insulation from the economic cycle.
Antin invests in primarily four sectors. Energy and environment is one of these. “We invested in Origis Energy, obviously in North America. We also own another renewable platform in Europe. We have been investing in the energy and environment sector since our first funds.”
Not all renewable companies fit the bill for Antin. In order to meet their investment criteria, Antin looks for platforms with sizable pipelines to build out, limited merchant exposure in order to realize cash flow predictability, and downside protection which can come from either an operating base of assets or good visibility over the pipeline through secure PPAs and equipment procurement.
Antin looks for platforms that are irreplicable to then scale them up and, in some cases, make them greener. For example, within district energy, a big topic is electrification rather than using natural-gas-powered plants to generate steam.
“With Origis one of the primary equity stories is around building out solar collocated with storage and increasing standalone storage. We agreed to invest significantly in a hydrogen story for Origis. And we’re big believers that Origis will become one of the key players in hydrogen production, a play that will leveraging our very significant solar base.”
Vence went on to elaborate that scale in solar is increasingly beneficial because the capital investments required to run a development business have nothing to do today with what they were just a couple of years ago. “You need a lot of equity availability to secure PPAs, to secure equipment well ahead of when you would secure equipment in the past. When we think about our purpose, our mission, which is to enable the green transition through capital, we think that solar is really the way to go.”
Antin also invests in transportation, a rail business in Michigan as an example. They invest in telecommunications, with fiber and telecom tower companies being part of their infrastructure asset class. Finally, the firm invests in social infrastructure, primarily healthcare and education.
Deal complexity drives Antin to focus on value creation from day one. It has a very bespoke approach which works to drive upgrades in corporate infrastructure to help scale-up portfolio firms.
People, both in the portfolio companies and at the Antin level, are key to this equation.
It is not surprising to hear Antin looks for exceptional leadership teams and works to help portfolio companies recruit additional senior talent to further strengthen the team. The customer side of the people equation is not overlooked and a focus on driving valuable customer relationships within their portfolio companies is key.
Another area of focus within the Antin portfolio companies is data. Building data roadmaps has become a critical topic.
“I’m not used to hearing private equity or infrastructure firms talk about data as a critical part of value. So, how does that drive value from your perspective?” queries Eyman.
“It’s become really critical to build a data roadmap within portfolio companies,” explains Vence.
The inclusion of more data can help improve top line, improve efficiency, and improve accuracy. There are key pitfalls to avoid when you build a data roadmap, Vence counsels. First, it’s a misconception that building a data roadmap will be disruptive to management. Leveraging proof of concepts on a more ad-hoc basis can be integrated into existing processes once fully vetted, as an example.
Secondly, building your data roadmap is not solely a systems project. A lot of issues arise from a lack of strategic or business-oriented focus on a data roadmap project, and the misconception may be to think it’s really just a systems project.
Finally, a last key pitfall Antin sees is thinking there’s no available data, or not enough to work with, and therefore it’s not worth doing the roadmap exercise. There is always more than you would initially perceive, and in particular with external data, advises Vence.
Executed well, a data roadmap can incorporate data science into any business thus quantifying value creation, driving value creation and helping leadership understand the inner workings of the market, all resulting in a more unbiased view than traditional expert discussions. The data roadmap can help executives manage the business more dynamically including implementing process automation.
Vence closed with the admonition that a data roadmap is by definition a journey, one well worth taking.
Eyman affirmed this thought: “One of the guys that gave me an opportunity when I came out of the military and really started me in solar, used to always say, ‘In God we trust, all else bring data,’”.
During episode 12, the power players discussed:
We’d like to thank our Power Players, expert guest David Vence and host Michael Eyman, for their insightful conversation addressing strategies for company value creation.