IFM's infrastructure debt capabilities

Infrastructure debt is a non-conventional, defensive asset class that can offer disproportionate returns for the relatively lower risks of lending to genuine infrastructure businesses (relative to otherwise comparable forms of corporate credit risk). The experience, networks and global scale borne of IFM’s market profile and track record in infrastructure investment means that we are particularly well-placed to take advantage of infrastructure debt opportunities.

Key benefits of IFM Infrastructure Debt

  • Highly experienced and well resourced team with specialist skills
  • Global capabilities
  • Tailor mandates to client requirements
  • Seen as an investor of choice thus providing excellent market access
  • Improved outcomes through market position and thus able to influence risk return profile.

An excellent investment opportunity

Infrastructure debt can offer relatively stable returns, low default risk and relatively higher recovery rates in the unlikely event that a default does occur. This means lower expected losses from defaults and hence very low overall loss rates, compared to otherwise similar corporate credit risk.

Learn more about the benefits of infrastructure debt »

A bottom-up approach to debt investment

IFM’s approach to infrastructure debt is characterised by intensive bottom-up, asset-specific credit analysis. This is supported by top-down macro views where these are relevant to the assets. The approach is rigorous and disciplined. IFM internally rates all investments regardless of whether they carry an external credit rating, drawing on considerable analytical resources, extensive business infrastructure and legal expertise.

Disciplined infrastructure debt investment processes

IFM’s credit investment processes adopt strong credit disciplines underpinned by a rigorous, bottom-up analysis across a seven stage process:

  1. Market knowledge and deal identification
    The team’s strong credit expertise and experience in infrastructure has bred an intimate understanding of infrastructure markets and a wide network of contacts. These market contacts provide access to wide range of high quality transactions. IFM is also a desired debt participant for major new public-private partnership (PPP) syndicates.
  2. Asset screening and portfolio fit
    Not all high credit quality infrastructure debt deals offer optimal value to investors. Our approach to seeking value means that we screen as many potential transactions as possible, rejecting transactions with unfavourable risk and return profiles, or those which do not align with portfolio and client needs.
  3. Fundamental credit analysis
    We internally rate investments through a bottom-up analysis at the micro level, within a macro framework. We seek to understand factors such as the key drivers for the business sector and the determinants of industry cyclicality. We examine financial metrics, but more importantly what drives these and we examine the risks of default and recovery prospect through stress tests and scenario analysis. We consider the borrower and, where relevant, its shareholders’ stability as well as legal, tax and responsible investment issues.
  4. Detailed written credit assessment
    We employ the discipline of written and transparent credit assessments that can be closely scrutinised by both peers and approval authorities to avoid untested and fuzzy assumptions. These documents draw upon the expertise of other IFM investment teams, including the Infrastructure Equity Group (where appropriate) and must withstand internal and potentially external scrutiny and also justify portfolio fit and value.
  5. Formal credit approval
    IFM applies a rigorous investment approval process with clear delegated authority levels. Specific dollar thresholds apply at which the investment decision must be made by a higher authority such as the IFM Investment Committee and, ultimately, the IFM Board Investment Committee.
  6. Monitoring, reporting and review
    Ongoing management of the portfolio is critical. We continuously monitor both the macro environment and at the asset level.
  7. Compliance and risk management
    We have strict compliance and risk management processes independent of the investment teams.