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The toughest problem in capital allocation with infra managers is the lag between investment results and fundraising cycles.
A manager can raise fund II and sometimes even fund III entirely on unrealized results.
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A manager can raise fund II and sometimes even fund III entirely on unrealized results.
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Good fundraising matters more than good investing or business building skills.
By the time that a manager is “proven”, a decade or two has passed and questions about commitment to the next fund, internal balance of power or quality of the next layer of the org chart arise.
By the time that a manager is “proven”, a decade or two has passed and questions about commitment to the next fund, internal balance of power or quality of the next layer of the org chart arise.
Assets in infra can easily have a 7 - 10 year thesis. By then, the biggest driver of your success could easily have been uncontrolled macro events like overall cost of capital.
You can paint any story in that length of time if things go sideways.
You can paint any story in that length of time if things go sideways.
I feel this could be a riddle/anecdote in a @nntaleb book. Options traders and long/shorts have much shorter feedback cycles.
Private equity would be in between with 2-4 year cycles.
How do pockets with very long feedback cycles behave?
Private equity would be in between with 2-4 year cycles.
How do pockets with very long feedback cycles behave?
