Infrastructure funds raise board influence Funds investing in infrastructure assets are increasingly wielding more influence over their companies" senior managerial appointments, according to advisers and headhunters. Although private equity firms have always been heavily involved in making boardroom changes when they acquire a company, analysts say that the economic downturn is encouraging infrastructure funds to quietly follow their lead. The trend reflects the funds" realisation that infrastructure can be a more risky investment than it was perceived a few years ago, as well as the need to focus on longer-term returns, analysts say. Simon Coxon, managing partner of the Curzon Partnership, a headhunter, says one consequence is that infrastructure funds are increasingly appointing chief executives with engineering and operational expertise. This marks a complete reversal of the trend when utilities companies were mostly publicly traded, and executives with finance backgrounds were sought after. The way a business operates when it is owned by an infrastructure fund is very different from the way it is run when it is publicly listed. That will often mean an almost complete change of the board," he said. Board level executives in listed utility businesses naturally have to spend a significant amount of time communicating with shareholders, whereas executives in infrastructure fund portfolio companies are focused purely on delivering long-term improvements to operational performance. Operations managers with an engineering background who were promoted to chief executive after being acquired by an infrastructure fund include: ● Martin Baggs, appointed chief executive of Thames Water in 2010, who was previously the operations and assets director at Southern Water; ● Stewart Wingate, the chief executive of Gatwick Airport, who is a chartered engineer and fellow of the Institute of Engineering; ● Peter Simpson, the managing director of Anglian Water, who completed a masters in analytical chemistry before becoming an operations manager. Anthony Rocker, global head of infrastructure investment at KPMG in London, says the trend is likely to increase as infrastructure funds grow in attractiveness and expertise. "As the infra funds gain more operational experience from the assets that they have owned since 2005 onwards, they have realised that infrastructure is not completely risk free and also can benefit from operational improvements," he says. So as the asset class continues to grow in attractiveness and breadth I expect that more expertise will be brought in similar to the way that private equity businesses manage investments. Mr Coxon said consumers often benefit from infrastructure being run by funds because of their focus on long-term returns over 10 to 15 years. "Consumers often benefit from the changes because operational improvements made by engineers can deliver better quality services at a more competitive price," he said.