Partners Group dives into infrastructure investing; Kayne’s Nishita Cummings leads supply chain deals

Good morning, dealmakers. MK Flynn here on the Wire.

Today we’ll take a Deep Dive into infrastructure deals, featuring my interview with Partners Group’s Todd Bright. The firm has been especially active in the sector.

And we’ll continue to highlight women dealmakers, as we’re doing all month at PE Hub and PE Hub Europe. Today, we’re featuring Nishita Cummings of Los Angeles-based Kayne Partners and Zeina Bain of London-based Sullivan Street.

But first, onto infrastructure…

Transformative trends: Infrastructure in North America is badly in need of an upgrade. For years we’ve expected a surge in private equity deals involving infrastructure, and lately we’ve been seeing some.

Partners Group is one firm that’s been active, with recent deals including the acquisition of EdgeCore Digital Infrastructure, the majority stake in Budderfly and the investment in Milestone. The firm has regional headquarters in Baar-Zug, Switzerland; Denver; and Singapore.

To find out more about the firm’s strategy, I turned to Todd Bright, head of Partners Group’s Houston office and co-head of private infrastructure in the Americas.

Here’s an excerpt from my Q&A with Bright:

What’s driving private equity-backed deals in infrastructure in 2023?
More than ever, infrastructure investments are driving transformative trends in our economy, rather than being driven by them. Those trends include the electrification of sectors like transportation and industrials; decarbonization beyond the impact of renewables through energy efficiency, carbon capture, and sustainable fuels; the need for smarter and safer supply chain infrastructure; and sustainability in everything from water to data centers. The companies and entrepreneurs that Partners Group is backing are providing these essential products and services at a faster pace than government mandates could ever hope to achieve on their own.

How is the current macroeconomic backdrop affecting deals in the sector?
The current macro environment is a two-sided coin. On the one hand, debt is less available and significantly more costly, construction and operating costs are going up, and the competition for good assets is still strong, so seller reserve prices have not come down in lock step with rising interest rates. On the other hand, covid, the Russia-Ukraine war and broader geo-political tensions, the climate crisis, and supply chain constraints have heightened the focus by both the public and private sectors on energy security, resiliency, supply chain on-shoring, and sustainability. This is creating trillions of dollars of needed investment in infrastructure between now and 2030.

Tell us about the growth plans for some of your portfolio companies.
We will take Budderfly’s energy-as-a-service solutions to a broader commercial market beyond the Quick-Service Restaurant segment, adding behind-the-meter generation. We also will integrate its assets with cloud-based technology so that it can sell demand response products to grid operators.

EdgeCore will add to its operating portfolio by building out its pipeline of projects in key data center markets like Santa Clara, California, and Sterling, Virginia. EdgeCore designs its assets with sustainability in mind, including low emissions, power usage effectiveness, efficient water usage and dedicated solar development programs.

Milestone will grow across its trailer, chassis and container segments through expansion of its logistics network, accretive M&A and market expansion.

What are the exit opportunities for PE-backed portfolio companies in infrastructure in 2023?
There are still ample exit opportunities for growing platforms in next-generation infrastructure thematics with lots of tailwinds. One of the reasons we like platforms versus single “old infra” assets is because they offer much more optionality around not only how to create value but also how to realize that value. Single asset investments generally have more undiversified exposure to higher opex, capex and debt costs, and if those assets lack thematic tailwinds, then their buyer universe may be shrinking. We are trying to steer clear of those dynamics with our thematic platform building approach.

Proactive leader: Throughout the month of March, we’re celebrating women in private equity, including PE Hub and Buyouts’ annual special report, featuring 10 outstanding dealmakers.

Today, we’re highlighting Nishita Cummings, who is known by her colleagues at Kayne Partners as a “proactive leader and critical driver of the firm’s strategic growth.”

Her job title is a mouthful, but it reflects the range of roles she plays at the Los Angeles firm. She is a managing partner, co-head and co-portfolio manager of Kayne Partners, the growth private equity group at Kayne Anderson Capital Advisors. She serves on Kayne Partners investment committee, as well as on Kayne’s board of directors.

Her contributions to Kayne Partners are many. She has helped refine the firm’s proprietary sourcing strategy, including expanding into Canada. She has identified significant investment themes, such as supply chain technology. And she has driven value creation at portfolio companies, including overseeing 10 exits over the past year.

Her dealmaking prowess is considerable. Since joining the firm in 2007, she has been a key player in many of the 43 platform investments and 22 exits completed by the Kayne Partners team across five funds and five co-investment vehicles.

Cummings spearheaded Kayne Partners’ supply chain technology thesis, which has resulted in investments in 14 companies over the last decade. They include: KlearNow, (a customs clearance technology provider), FreightWaves (a provider of supply chain research and intelligence), DriveWyze (a transportation tracking technology software provider sold to Sageview Capital) and DiCentral (an e-commerce payments processor sold to TrueCommerce).

“Supply chain technology has all the ingredients that we look for in a sector – significant headroom for technological adoption, complex end-user requirements that warrant the use of technology, and strong secular growth within a dynamic and rapidly changing environment,” Cummings told me.

Boys club: “The guys definitely hang out without us,” said one woman dealmaker at a conference recently, reports New Private Markets’ Snehal Shah.

While the private equity industry has made great improvements in recruiting more women to entry level and junior positions, it is having trouble retaining them, particularly in investment roles. McKinsey’s 2022 diversity in private markets report found that the attrition rate for women in investing roles in the Americas is higher than for men across entry level, associate, vice-president, principal and managing director roles.

The report also found men are promoted more frequently at all these levels than women.

Shah spoke with a dozen women in private equity to hear about their first-hand experiences of working in private markets. The conversations were held at a PEI Group private equity conference in New York, on condition of anonymity.

Several of Shah’s sources described being excluded in subtle, possibly unintentional ways.

Decisions are sometimes “just made without me,” said a woman who serves on the investment committee of her PE firm.

Saying “yes”: Zeina Bain, who joined London-based Sullivan Street as a managing partner in 2022, has touched industries from car washes to claims management and aircraft to chemicals in over 20 years in private equity.

Saying “yes” has been a key part of how she has approached the industry, Bain told PE Hub Europe’s Craig McGlashan as part of our International Women’s Day series.

Starting in investment banking at the end of the 90s – “a pretty tough environment you wouldn’t recognize today in terms of how women were treated” – and having an early experience of crazy hours and no daylight for two years likely inspired that first lesson.

“Have that conviction in your own judgement,” she advised.

“Majority of my early career I thought, if I just work that extra hour, that’s how I prove my value. Judgement, how you handle yourself around people, how you make connections – that is what makes a successful senior professional versus being a workhorse. As much as you can, say yes to things, take on responsibility, put yourself out there.”

I’ll end for today on that positive note!

As always, I’d love to hear from you, Dear Reader. I’m especially interested in exclusives on deal announcements and interviews with high-level private equity pros.

Please email me at mk.flynn@peimedia.com.

Tomorrow, Obey Martin Manayiti will write the Wire, and he’ll feature a deal roundup involving semiconductors.

And I’ll be back with more on Monday.

Happy dealmaking,
MK