YouSaid · the spoken record

Ross Israel

lines on the record: 85
first: 2018-05-21
most recent: 2018-05-21
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I think to really sort of enjoy the journey and embrace the relationships that you have on that journey, whether it's lots of time with family or just with the interesting people you meet, you're sort of driving to get to point B from A and you sort of sometimes forget how lucky it is to meet some of the people you do in the trip. And so what I'm finding now is it's quite a good thing to go back and thank those people and embrace those relationships, which I think you can always do. Don't leave it too late.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because there was probably a lot of opportunity maybe elsewhere and government owned corporation always an element of doubt about how it would work out. You know, not always the most reliable, stable places, but it's been, and I've been greatly privileged to be able to sort of build the team there and have the support and confidence to do that from people around us.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“I feel good about moving to QI6 because I went back from Sydney to Brisbane. It was a go from scratch situation, but it allowed me to go back to Brisbane where I and our family grew up close to their grandparents.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“I found flipboard to be quite interesting sort of app where you can get a lot of information, you can craft it yourself. The second has been trying to understand more mental models of how some of the things that infrastructure are changing. And my second son is doing science, which is like a completely foreign place. So I've discovered Coursera, which is like a website where you can sort of go back to school sort of thing and learn about these things from first principles, which I found to be really interesting.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would summarize it as the golden rule, like the way they would frame it would be. In terms of others, look at them only as you would want to be treated.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, I played rugby at university. Was fortunate there was a great number of players. Michael Liner was the 5'8 for the Australian Wallabies at the time. And great day. Sort of one of those things where you're looking, you're playing, but you're really looking, having sort of an out-of-body experience. We had a big day. We won pretty handsomely and I'll never forget. He just said, don't worry about one thing. I was a halfback passing to him. He said, just make sure you deliver the ball with the laces up, which is a bit scary when you think about it.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was 13, and unfortunately, if we look at them now, they're in the cellar. So we've got to hang on and hope they sort of rise back up.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“My favorite sports moment would be in Australian rules grand final where I followed Carlton as a kid and I went with my father to a grand final in nineteen eighty one and they were down deep in the third quarter, four quarters in Australian Rules football game and they came back and won and I've been a lifelong fan.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Public debt elsewhere around the world will actually invigorate governments to actually recycle infrastructure assets and pay down that debt and use it to potentially reinvest in new infrastructure in time. But the nature of that public debt, I think, is probably a positive because government has been the largest funder of infrastructure historically.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we see that as positive for private infrastructure investment because the ageing demographics, I think, are going to affect a couple of things. Deccumulation of savings pools with respect to the baby boom generation promote the type of asset class we're in in terms of infrastructure where yield and stable, predictable returns is going to be an attractor. We then also see significantly increasing healthcare costs adding to that public debt and therefore creating opportunity for private investment in infrastructure to go alongside government. And so increasingly we see government embracing public-private partnerships to work with investors institutionally or strategic players to augment existing infrastructure. So that's an important aspect. The other aspect is whether in fact that will be a catalyst for what we've seen in Australia which is this recycling of government assets and whether in fact large”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“So you're looking into where there are key customers. So you're looking in some ways to get customer linkages which give you long-term contracts. So that is back to that stable, predictable cash flow profile. We see sort of increasing risk in regulated poles and wires where there's going to be a change in the pricing because in some ways it was a one-way price. Going forward, electricity might flow back from the customer into the grid. And so the relevant volumes across poles and wires may alter. And so from that point of view, we've got to be looking at assets that if they are incumbent are going to be actively managed to meet that challenge.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Distributed energy, this convergence of renewables and battery storage is going to be a really big change. If I can summarize the opportunity, we've seen Uberware there's been excess capacity in the car fleet. The one place in infrastructure where there's massive excess capacity is in electricity because we've built a grid for the peak. And so being able to store electrons and do that at a cost effective manner and then decentralize what's been largely a centralized network is a really big change in risk and return over the next decade.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“In some ways being an opportunity with respect to the way governments will be constrained, so that provides more opportunity for private investment institut. And we see the larger funds in the internalization of capability again acting to sort of affect pricing. That being said, we are a view that more active management is going to be required in infrastructure with all of those factors and the cycle. We're in the latter stage of a cycle and going forward to differentiate, we really think these businesses are not set and forget. A lot of people like the stable predictability nature of them, but in essence they are operating businesses. So there are ongoing matters to deal with if you're going to have hold them for the duration that a lot of these investors want to.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're worried about Disruption in certain sectors. So we see that in energy particularly. We see digitalization empowering customers more and more. So that has a real input in terms of how assets would be run, in terms of infrastructure. We're seeing decentralization of some of the networks that traditionally have been in energy in some healthcare assets. We're seeing that as well. We're seeing, I suppose, Public debt, levels,”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“The discount rates have come down. Let's say when we started mid teen returns, equity IRs were sort of possible, that as well and truly drifted south in terms of the core assets, you know, some of the very core assets are single digit IRRs. People in terms of the market cycle have been deeply attracted to it. It's been a safe refuge as well in terms of core yielding assets. So we've found the cycle, we've had a tailwind. Real interest rates dropping over the last 15 years has been a significant tailwind. For infrastructure going forward, it'll be really interesting to see how performance shakes out in a rising interest rate environment, which will probably sort of be more meaningful in terms of showing we're active management of the assets is.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“That just make the pricing dynamics that much harder to purchase. And so, if you look at it from when you joined in 06 to today, twelve years later, For a comparable asset, what's changed in the purchase multiples?”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe more assets are privatized, more assets are willingly in a secondary market. So as I said before, some of these assets don't trade all that often. So then you have these large investors who deeply value that tier one core asset very highly and are growing their big, large asset pools. And as a result, they find some of these assets extremely attractive to buy and hold.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Raise capital, there's been a lot of capital sort of raised in the asset class, and there's an ongoing segmentation occurring in the asset class as it matures as well. As people, very similar maybe perhaps to real estate where you had this division of the asset class, we're seeing that in infrastructure by geography or by sector, whether it's energy, transport, renewables, or whether it's by risk return. And so we're seeing increasingly people become more sophisticated in portfolio construction around an infrastructure allocation and the pressure of that emerging with particularly more allocations, the supply side is not necessarily as constant as it might be in some other asset classes. And particular countries would have more supply because some”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we've seen a large number of very big pension funds go direct, that there's an internalization that is occurring. They are attracted to the duration of the assets, the cash, yields that come off that, particularly in this point in the cycle where yield has been sort of hard to find. And so they have become increasingly prevalent with”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the last bunch of years there's been more and more money in the hands of large private equity funds, whether participating in infrastructure or general private equity. What have you seen in the competitive environment for the assets that you're looking at?”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have to make trade offs. The perspective is it's a long duration asset. And so you can dial up in the short term returns, but you will have a consequence with respect to underspend if you look at the quality of the service or the quality of the assets and their maintenance. And so the ongoing challenges being predictable over that duration and actually ensuring that the stakeholders abroad along. And part of that is probably something that requires transparency at times to be very clear and engaged where someone's not engaged there are stakeholders around infrastructure that can really rock the boat.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a very strong centering on customer bills and the value equation that's delivered to the user. So whether it's a toll road, whether it's an electricity distribution company, those aspects are always coming into play.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“The core mission is still to get stable predictable returns from the allocations that are typically given to us in infrastructure. So relatively robust yield and ongoing steady capital gain. So from our point of view, the stakeholder group that I mentioned before around these assets is what you've got to be on top of. The service quality of the offering to customers, the ongoing investment in the asset, health and safety of employees is a big aspect. Labour issues are very political around some of these assets. You've also got a desire to keep growing the asset in a relative sense to meet economic activity. And so being prudent about that investment and timely in expansion is obviously a sensitive issue for government, for regulators in Australia.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“How do you think about your objectives? So in a private equity transaction maximize IRR, whatever it is, multiple return on capital. In some of these particularly local assets, where there are broader constituents, who's using the toll roads, the government agency, what's the core mission that you take on when you're buying one of these assets?”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“A strong level of support in our asset class particularly, and from a wider sense I suppose that pressure to invest at home has been high and fairly constant at times and there's always been an effort to try and bring capital into the infrastructure asset class, there's a diversification imperative though that has to be done as a fiduciary which continues to derive Australian capital offshore in terms of some of these sort of unlisted asset classes, private equity, real estate and infrastructure.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe not casting suspicions on anything, but the investments have been made and the service levels have been very high. The returns, it's been a virtuous circle in the sense that the assets have improved, that capital has been sourced locally, and so therefore members in those funds have actually shared in good returns as well as getting the utility of the asset. And so from that point of view, there's been...”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Their very meaningful pools and in Australia a lot of that capital has found its way into infrastructure positively in large assets and the airport sector by way of example which was privatized in the late nineties early two thousands has really been owned largely institutionally by superannuation funds. They have invested in those assets. You may or may not have had any insight into travelling through an Australian airport. It's a reasonably good experience on a global basis.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then, as you cross geography, you've got foreign exchange, you've got political risk as well, which comes into play depending on emerging markets, developed markets, OECD versus other constructs of regions around the world.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“The first thing is we're really proponent of the sector approach, but people live and breathe a sector in our team. So they originate, they execute their asset management, the sector. So that means you're looking at a port in Australia, looking at a port in the US, looking at a port in Canada, you're comparing operating models. So that's very powerful. Around that, to your question is, what's the regulatory environment in that geography? What are the stakeholders amongst government regulators or customers that are really different? Some assets are networked. So airlines and shipping lines are an example that parlay into ports and airports which are networked. But then many other assets, energy assets in some instances are very local and regional. So then you've got to get in and under and understand what are those really local factors around that market which are going to affect, I suppose, the outcomes over a long time.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“And are those do those buckets tend to be standard? I mean, at some level, you look at it and say, oh, you're buying a port, you're buying an airport, you're buying a toll road. How do you differentiate between the assets that have viable long duration and others that might not?”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we're all always asking, are we adding uncorrelated return in the asset we're looking at to a portfolio? Can we differentiate in a competitive environment on an asset, a business plan that will drive success? The asset class continues to evolve, and so we keep asking ourselves, where are we in the market cycle? Where can we differentiate? Is this a really high quality property where we feel we can put a business plan together that will fit the duration and the return profile of our investors?”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“As a business that we are active in post morteming, what we don't aren't successful on, what we've found as successes, we're certainly not precious. We don't think we're the best at everything. We're very keen to understand where we're...”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, on the origination side, we're really driving how many things have we got in the pipeline? So it's not about conversion of X to Y. It's actually about getting to a certain level or a number of deals that we're putting into our pipeline. And having that origination as wide as possible within the context of what we've agreed are the relevant themes in a given year that we want to sort of hit and where are we matching that to relationships to drive those deals into our pipeline. So that's probably the first thing. The second thing is around asset management is having acquired something, have we moved through to plan in respect to the business that we put forward in terms of a business plan? And how have we executed on that in transition? And then how have we executed two years, three years, four years after we've acquired the asset? And then the third is really around how we continuously improving.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“To provide wider perspective on what's going on in some of the areas elsewhere in the world, which would be of interest and relevance to the government in the state of Queensland.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's probably one of the things philosophically about running external capital. It provides a benchmark in terms of what those customers or clients want. And so we put that against the public clients. The public clients get a very attractive deal as a result of being able to run external capital. But the alignment model is a sensitive one, clearly, because there are a range of industries owned by government and funds management is a particularly different one in the context of their portfolio. And so it must be coming back to adding value to the asset liability mix we're managing on their behalf, adding value into the state in terms of economic activity, investing in businesses, in infrastructure and other asset classes we run. And then being a source of council advice if required.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“And when it comes down to brass tacks in terms of numbers, I know in the States any of the public pension funds, the compensation is public, it tends to be very muted compared to the private market roles, similar functional roles in the private markets. What does that look like for you?”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's sort of around the financial performance of the corporation where we've got to be sustainable in terms of the staff we have, both back office, middle office and front office. We want to be able to invest in our systems and we want to be able to invest sufficiently to meet the challenges that are out there to be more efficient and productive.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a really interesting question because we can't offer stock because we're government owned. So the model we've gone down with is really around alignment with our underlying investors. And so it is through a carry structure that is aligned to the performance that we deliver to the client. We have short-term incentives which are driven around, again, investment performance, predominantly around half of our sort of KPIs would be linked to that. The remainder are broken out into risk and the like around processes. The third category would be culture, making sure the culture is aligned with a very clear set of values as a fiduciary. I think that's a very strong feature with respect to how the teams are sort of managed. And then the last feature is”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Quite a long time on equities. We had a really good crack at it. It was sort of well before I started that we ran and then probably two or three years into my time at QIC, we decided that that was not going to be something we could pursue further. On the quant side, probably two to three years, we gave the strategies. There is a procedural justice to that element, I think, that was sort of undertaken. But it certainly keeps you focused with respect to performing, which is, I think, the underlying philosophy that they have.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Listed equities, and we had quant, we had a number of quant strategies that we just couldn't get the enduring performance to attract external capital.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“In our show experience. Yeah, look, there has been poor performing assets and strategies. We have had to make the hard choice over time of not continuing certain types of asset classes and in that we come back to a sort of core group. So that is real estate, private equity, infrastructure. We've got a global liquid strategies area, which is really the listed side of the business. And then we've got what we call our managed fund area, which is really where the DB fund sits with the CIO.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Within the guidelines, there's a risk overlay in that that I wouldn't want to understate. And there's also a reputation overlay that comes with that because of certain types of assets in the infrastructure space.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have our own investment committee for global infrastructure. It has a majority of partners in the team on it and it has two external members, one of which is the chair. We then have above that a trustee board which is overseeing the products and the relevant sort of mandates that we run and that has got on at people from the QIC board and they oversee if you like our adherence to all of the guidelines that we've said we would invest to. So it is very empowering to the investment teams. At certain levels there's this very strong oversight of reputation risk which occurs with respect to the QIC board but the QIC global infrastructure investment committee is in essence the key decision maker around investment decisions.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“How does the decision making work on the fund? Because when you think about a sovereign wealth fund and a CIO, there's CIOs, there's different ways of delegating responsibility. Now you have outside capital. So how does that play out?”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's all institutional. So we had success in Asia with insurers, with sovereign wealth peers. We had a couple of investors outside of Australia as well in Europe and also in North America. And we had strong support from superannuation funds in Australia where QIC has a brand recognition and is sort of well positioned in terms of its track record, I suppose. Yeah.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Look at helps, Ted, but the impetus on privatization is it's got to be a public process in Australia at least. But the mindset that you come from being within a government purveyed at times has been helpful, not in every market. In Queensland, we are uniquely placed because we have a very active dialogue with the state trying to sort of give them inspiration into how infrastructure is being financed elsewhere in the world, some innovation that's occurring, which hopefully can be applied for their benefit. So it has pros and it has cons and we have affinity with certain types of other co-investors. So Asian investors particularly, I think have some regard for the government heritage, not in every market, however. So it does differ. It does differ.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the government side of that, do you end up having a competitive advantage in called Australia or Queensland assets because you can imagine the influence if US private equity firm or a Chinese government entity came in and wanted to buy a port, the sort of strategic asset dynamic? How does that play out in the deal dynamics”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“regulators, and the third is government at a state, municipal or federal level. You intersect with those stakeholders regularly and typically trip and fall in outcomes in the asset class is because you haven't managed one of those stakeholders very well.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I found the internal clients to be really even more hard on us because they just around the corner and they set a very high bar in terms of expectations. And so that was a great grounding to going out and then talking to larger external clients. We had a good sense of it. But the rewarding factor is the public heritage is quite interesting from a duration perspective. It also opens interesting exchanges in infrastructure because there's a lot of assets that are tied up with government angles. As you can imagine, a lot of infrastructure is still in that domain. So having that heritage has been quite good in dealing with stakeholders around infrastructure assets because there are three stakeholders in infrastructure assets that keep emerging. The first is obviously the customer of the asset.”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source
“So as you look at the organization, and you've also worked at a private fund in the past, is the business activity the raising of capital, the servicing of outside clients similar or is it different than it was when you're just at a fund management company?”
2018-05-21 · Capital Allocators · Ross Israel - Stable, Predictable Cash Flows (EP.53) · IDENTIFIED FROM THE TRANSCRIPT · source