In September, Gravis CEO Phil Kent presented at The Wealth Forum Scotland, a half-day event hosted by Wealthwise Media at The Balmoral in Edinburgh. The forum brought together fund selectors from across Scotland with six asset managers, each covering a different sector. Phil spoke on infrastructure.

After the forum, Phil recorded the video below for the Wealthwise team. In it he introduces GCP Infrastructure Investments, for which he is a lead adviser. You can read the full transcript beneath the video.

So I'm the Chief Executive at Gravis. I've been at Gravis for the last 10 years or so. I've been managing GCP Infrastructure [Investments Limited] (GCP) for the last 7 of those years. We're about 50 people based in London. We manage around £2 billion of assets. We are a specialist investor in infrastructure, real assets [and] real estate. That's across both direct investment vehicles such as GCP, but also a series of open-ended funds that buy listed securities within our specialist thematics. So we have a UK infrastructure strategy, a global clean energy strategy, a UK listed property strategy, and a digital infrastructure strategy. We also manage private market strategies on behalf of charities and institutions as well.

We're owned by the ORIX Corporation, who's a conglomerate, Japanese-based conglomerate listed in Tokyo and New York, [which has] a market cap of around £30 billion, and assets under management around £300 billion. So we benefit from being part of a much larger group with a more global perspective.

It's a peer group, I guess, that spans both infrastructure investors, but also renewable investors, and real estate housing investors. I think the key thing about GCP is it's differentiated from that wider peer group. I think, first of all, we focus on debt rather than equity. Within debt, we focus on availability-based assets, so assets that benefit from some form of public sector support, so cash flows are underpinned by whether assets are available to be used or not and are paid on that basis. That's distinct from other debt strategies that may be more geographically diverse. We're very UK-focused, shorter duration, [while the peer group may be] more GDP-linked in terms of their revenues, so I would say GCP offers a more defensive asset class with more downside protection.

Looking to the wider, I guess, equity peer group, I think there's a real distinction that I can draw between those that look at infrastructure as an asset that does a job over its life, and their investment process looks at the cash flows generated by that asset in isolation, versus perhaps investing in utilities or businesses where maybe you have a very infrastructure-heavy balance sheet, but you also have a capital structure that's very different. You have employees, pension liabilities, a business strategy that might span multiple geographies. So, some more private equity corporate style of investment versus a pure infrastructure investment. So I think GCP has been very disciplined about looking at pure asset-based investments, and I think it's other distinction is it focuses on debt versus equity.

So I think now's actually a really exciting time to be investing in UK infrastructure. We've got the combination of macro factors such as digitalisation, the decarbonisation of our economy, the demographic challenges that we have demanding a huge investment in infrastructure. A report published earlier this week identified around £260 billion of a gap that we need to fund over the next decade in Britain to fund that infrastructure. As a result of that, we're seeing quite a lot of new government support models being introduced to support private sector investment in infrastructure. That's expansion of existing models like the Contract for Difference, but also new models such as Direct Procurement for Customers, which is a PFI/PPP-type model for the water sector. So I think the macro factors are really positive. We need lots of investment in infrastructure, and I think the private sector has a really important role to play.

GCP, I think, as a fund, is really well placed to take advantage of those opportunities. There's been a recent rerating across the sector more broadly, but also GCP specifically, off the back of the capital allocation programme that we've managed since 2023. What that means is we're now in a place where we're close to being able to take some of those exciting new investment opportunities. There's a really attractive income that can still be generated by infrastructure investments, with some potential for a rerating if that discount were to continue to narrow, as it has done over the last 12 months or so.

Important Information

This video has been prepared by Gravis Capital Management Limited (the "Investment Adviser” or “Gravis”) and is for information purposes only. It is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Any recipients of this video outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction and are treated as having represented that they are able to receive this video without contravention of any law or regulation in the jurisdiction in which they reside or conduct business.

This video should not be considered as a recommendation, invitation or inducement that any investor should subscribe for, dispose of or purchase any such securities or enter into any other transaction in the GCP Infrastructure Investments Ltd (the “Company”) or any other fund affiliated with Gravis.  The merits and suitability of any investment action in relation to securities should be considered carefully and involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of such securities.

No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of the Company, the Investment Adviser or any of their respective directors, officers, partners, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained in this video and no responsibility or liability is accepted by any of them for any such information or opinions or for any errors, omissions, misstatements, negligence or otherwise for any other communication written or otherwise. In addition, neither the Company or the Investment Adviser undertake any obligation to update or to correct any inaccuracies which may become apparent. The information in this article is subject to updating, completion, revision, further verification and amendment without notice.

Past performance is no guarantee of future performance.

Gravis Capital Management Ltd is authorised and regulated by the Financial Conduct Authority; registered in England and Wales No: 10471852 and its principal place of business is 24 Savile Row, London W1S 2ES.