Press release from Infrastructure Investor:
Infrastructure pay Grows for Professionals Acquiring and Managing this Alternative Asset Class”
Compensation Infra’s continuous evolution will require new skill sets resulting in more employment opportunities and higher pay
As infrastructure has grown from a nascent asset class to a mainstream alternative strategy, so has the pay for the professionals acquiring and managing its assets, writes Kalliope Gourntis.
Sousou Partners, a recruitment and advisory firm specialising in real assets and alternative investments, shared exclusively with Infrastructure Investor its data on the base salaries and bonuses that infrastructure executives earned in 2019.
“Compensation has definitely gone up over the past decade,” says Serene Hamzawi, the firm’s managing partner, real assets. “I wouldn’t say it’s been drastic, but it has definitely gone up. And I think over the next few years the trend will continue. As more LPs allocate capital to real assets strategies generally speaking – and infrastructure more specifically – I think we will see more upward pressure on compensation.”
Our Perspectives 2020 survey found that 36 percent of limited partners that were invested in infrastructure funds plan to increase their allocation to the asset class this year. Sousou Partners’ data show compensation is divided into two categories. The first is private equity infrastructure and energy funds. Alternative investment management.
According to Hamzawi, these include groups using a private equity model to invest in infrastructure and funds investing in renewable energy and midstream oil and gas assets. The second category is core infrastructure. This includes groups investing in assets such as roads, railways, airports, utilities and social infrastructure, which have lower risk-return profiles than those in the first. Within each category, pay ranges were further classified across four levels of seniority. These ranged from associate level (professionals with four to six years’ experience) to managing director (at least 15 years’ experience).
From the top
For example, in 2019, a managing director in the private equity infrastructure and energy funds category earned as much as $1.85 million if both base pay and bonus were at the high end of the pay scale – that is $650,000 and $1.2 million, respectively, and excludes carry. In the core infrastructure category, a professional at the same level earned $1.7 million, or 9 percent lower than their PE-infrastructure counterpart. Alternative investment management.
“Assets in both categories are equally complex to run and operate,” Hamzawi explains. “But it’s the risk/return profile that makes compensation higher in the private equity environment versus the core infrastructure environment, where it’s more of a yield play and a long-term investment.”
The gap between the two segments widens at the more junior level. At the mid-range of pay scales, associates in the core infrastructure segment earned 26 and 37 percent less in base pay and bonuses, bringing home a total of $210,000. This compared with the $275,000 total their private equity peers earned. Alternative investment management.
—
PUBLISHED at, Infrastructure Investor – March 2020.