The ownership interests we currently hold in our portfolio companies ranges from circa 15% to 100%. Our approach is to ensure that: a meaningful level of equity is acquired (typically greater than 50%); formal board representation is secured; and relevant influence over all material decisions is obtained.
We take an active approach to asset management in pursuit of long-term sustainable value-creation. This is often achieved through controlling interest, or at least meaningful stakes with decision-making influence. Whilst not a criteria for investment, we have a preference for taking 100% ownership of our investee companies; and the evolution of our fund structures increasingly enables 100% ownership. Eight of the infrastructure assets in our portfolio are 100% managed by our business. The average ownership interest is over 60%. These include assets whose ownership is held by various funds and separate accounts, under common management. Any minority interest held tends to be significant, and is typically acquired with additional strategic rationale (e.g. envisaging accretion opportunities, sector access etc.).
We like to take a lead role in acquisitions (most obviously in 100% acquisition scenarios) and lead the agenda in the consideration of all investment issues, including ESG. Furthermore, in instances where we do not acquire a controlling interest, we are sure to carefully select aligned co-investors so that we have a similar approach to all investment issues, including ESG considerations, which extends to defining strategy and approving policies.
We are long-term investors in each of the portfolio businesses we invest in – typically longer than 10 years; and we have examples in the portfolio of infrastructure asset investments that have been held for 20 years. Our underlying investors, such as pension funds, typically have very long term investment horizons. Additionally, the assets in which we invest are typically long-life assets. All of this allows us to a long-term view on business cases and investment decisions. This is particularly pertinent for investment decisions involving ESG issues, which have a positive impact on the value of the infrastructure business over a long period of time.