1 00:00:00,240 --> 00:00:02,800 Speaker 1: Everything for us is a long game. It's never like, 2 00:00:03,520 --> 00:00:05,960 Speaker 1: what's a business that I could just buy, put some 3 00:00:06,000 --> 00:00:11,240 Speaker 1: cost out, fixed up and sell Wherever people are taking simplistic, 4 00:00:11,400 --> 00:00:15,320 Speaker 1: top down views. If you're writing the details, you'll find opportunity. 5 00:00:15,560 --> 00:00:17,880 Speaker 1: What we say is is this something that's critical to 6 00:00:17,920 --> 00:00:20,640 Speaker 1: society in a society going to need more of this 7 00:00:20,760 --> 00:00:24,720 Speaker 1: over the next few decades. We like investing in private 8 00:00:24,720 --> 00:00:27,600 Speaker 1: companies to unlisted companies. The reason for that is it's 9 00:00:27,640 --> 00:00:28,760 Speaker 1: going to sound nasty. 10 00:00:32,440 --> 00:00:35,280 Speaker 2: Hello and welcome to Shared Lunch, brought to you by Shas's. 11 00:00:35,800 --> 00:00:37,720 Speaker 2: My name is Sonya and at Shazas we're on a 12 00:00:37,720 --> 00:00:40,520 Speaker 2: mission to create financial empowerment for everyone, which is why 13 00:00:40,560 --> 00:00:42,480 Speaker 2: we do these chats. It's a chance to peek behind 14 00:00:42,479 --> 00:00:44,560 Speaker 2: the curtain and chat about what's going on in the 15 00:00:44,560 --> 00:00:47,720 Speaker 2: world of business today. On Shared Lunch, we're joined by 16 00:00:48,040 --> 00:00:52,000 Speaker 2: Paul Newfield, who's the CEO of Morrison, a global infrastructure 17 00:00:52,000 --> 00:00:54,840 Speaker 2: manager who is known as the manager of ASEX and 18 00:00:54,880 --> 00:00:58,639 Speaker 2: INSIDEX listed INFANTOL. Before we get started, here's some important information. 19 00:00:58,760 --> 00:01:01,240 Speaker 3: Investing in involves the rest You might lose the money 20 00:01:01,240 --> 00:01:04,640 Speaker 3: you start with. We recommend talking to a licensed financial advisor. 21 00:01:05,360 --> 00:01:09,200 Speaker 3: We also recommend reading product disclosure documents before deciding to invest. 22 00:01:09,480 --> 00:01:11,880 Speaker 3: Everything you're about to see and here is current at 23 00:01:11,880 --> 00:01:12,760 Speaker 3: the time of recording. 24 00:01:12,880 --> 00:01:16,319 Speaker 2: Welcome Paul Hey, Thanks Sonya, thanks for joining us today. 25 00:01:16,920 --> 00:01:20,320 Speaker 2: So you lead Morrison, which has about, from our records, 26 00:01:20,520 --> 00:01:24,000 Speaker 2: twenty five billion US dollars in assets under management, seven 27 00:01:24,040 --> 00:01:28,000 Speaker 2: off officers across five countries from Europe to Singapore, and 28 00:01:28,120 --> 00:01:32,360 Speaker 2: over two hundred professionals working with you. So tell us 29 00:01:32,360 --> 00:01:34,600 Speaker 2: how did it all begin for you? I think we 30 00:01:34,959 --> 00:01:37,560 Speaker 2: know you studied philosophy and now you're managing this company. 31 00:01:37,680 --> 00:01:38,959 Speaker 2: How did you get here? 32 00:01:39,160 --> 00:01:41,520 Speaker 1: Obviously, what you're asking is when you do a philosophy degree, 33 00:01:41,520 --> 00:01:43,600 Speaker 1: out of all of the many job of office that 34 00:01:43,640 --> 00:01:45,760 Speaker 1: came to you after you finish your master's in the 35 00:01:45,760 --> 00:01:50,400 Speaker 1: philosophy of love, why did you choose infrastructure. I did 36 00:01:50,440 --> 00:01:54,720 Speaker 1: my degree, I then went backpacking, came back thinking I'd 37 00:01:54,720 --> 00:01:56,680 Speaker 1: come back with ideas about what I do with my career, 38 00:01:56,800 --> 00:01:58,520 Speaker 1: and instead I just came back with a credit card 39 00:01:58,600 --> 00:02:02,160 Speaker 1: bill and literally went into the career's office at university 40 00:02:02,160 --> 00:02:04,120 Speaker 1: and said, can you give me the whole list of 41 00:02:04,120 --> 00:02:07,240 Speaker 1: any employers who come willing to look at philosophy grads 42 00:02:07,600 --> 00:02:10,520 Speaker 1: and it was quite a shortlist and happened to have 43 00:02:10,600 --> 00:02:13,800 Speaker 1: on at Boston Consulting. I didn't know anything about what 44 00:02:13,919 --> 00:02:18,000 Speaker 1: strategy consulting was, but was lucky enough to kind of 45 00:02:18,000 --> 00:02:20,360 Speaker 1: find this organization where they didn't care too much what 46 00:02:20,400 --> 00:02:23,200 Speaker 1: your degree was and they would teach you the basics 47 00:02:23,200 --> 00:02:28,120 Speaker 1: of business. And then literally one day I was having 48 00:02:28,160 --> 00:02:32,720 Speaker 1: a bad day at work and I caught up with Rachel, 49 00:02:32,720 --> 00:02:35,080 Speaker 1: who was an old colleague and friend who now worked 50 00:02:35,080 --> 00:02:37,160 Speaker 1: at Morrison, and she said, oh, this is great. I've 51 00:02:37,160 --> 00:02:40,080 Speaker 1: been telling Lloyd Morrison about you. You should meet Lloyd. The 52 00:02:40,200 --> 00:02:41,680 Speaker 1: next thing I know, I get this text message from 53 00:02:41,760 --> 00:02:44,480 Speaker 1: Lloyd Morrison, who at the time was a real big 54 00:02:44,639 --> 00:02:47,480 Speaker 1: figure in New Zealand, not just in business but campaigning 55 00:02:47,520 --> 00:02:50,840 Speaker 1: to change the flag, always very prominent on issues that 56 00:02:50,840 --> 00:02:53,080 Speaker 1: were important for the long term good of the country 57 00:02:53,080 --> 00:02:56,200 Speaker 1: and the world. And he said, I'm going to be 58 00:02:56,240 --> 00:02:59,000 Speaker 1: an Auckland. I'd love to have a coffee. We did that. 59 00:02:59,080 --> 00:03:01,640 Speaker 1: We talked about all kinds of things, none of which 60 00:03:01,639 --> 00:03:03,400 Speaker 1: were my CV. In fact, you hadn't seen my CV. 61 00:03:04,000 --> 00:03:07,040 Speaker 1: And at the end of that conversation he said, you 62 00:03:07,040 --> 00:03:09,160 Speaker 1: should to come and work for me if you want to. 63 00:03:09,160 --> 00:03:10,600 Speaker 1: If you don't, You're an idiot. And then I got 64 00:03:10,639 --> 00:03:13,320 Speaker 1: another text from him saying I wasn't kidding. Come and 65 00:03:13,320 --> 00:03:17,359 Speaker 1: meet the team. What really excited me was here is 66 00:03:17,400 --> 00:03:21,800 Speaker 1: this guy who had started what was basically the world's 67 00:03:21,800 --> 00:03:26,200 Speaker 1: first infrastructure investment firm when the asset class didn't exist, 68 00:03:26,720 --> 00:03:28,720 Speaker 1: and had been able to do that because New Zealand 69 00:03:28,760 --> 00:03:31,960 Speaker 1: was so early introducing private capital into things like renewable 70 00:03:32,080 --> 00:03:35,080 Speaker 1: energy and airports, and then had gone to take that 71 00:03:35,120 --> 00:03:37,880 Speaker 1: to the world and had this complete attitude of well, 72 00:03:37,880 --> 00:03:39,680 Speaker 1: if anyone can do it, why wouldn't it be us, 73 00:03:40,080 --> 00:03:45,720 Speaker 1: And having spent my career in professional services were surrounded 74 00:03:45,760 --> 00:03:51,200 Speaker 1: by really smart, overachieving, insecure people who always fear and failure. 75 00:03:52,080 --> 00:03:54,680 Speaker 1: I was like, here's a guy who's really smart, overachieving, 76 00:03:55,120 --> 00:03:58,640 Speaker 1: but doesn't have any fear of failure, and so I 77 00:03:58,680 --> 00:04:01,920 Speaker 1: basically resigned. Look up the job offer what a story. 78 00:04:02,200 --> 00:04:04,560 Speaker 2: I think. Definitely known for the impact of the infrastructure 79 00:04:04,560 --> 00:04:05,600 Speaker 2: and to art as well. 80 00:04:05,680 --> 00:04:08,240 Speaker 1: Right, Yeah, and actually that was one of the cool things. 81 00:04:09,200 --> 00:04:12,920 Speaker 1: Lloyd was. Yeah, great sport of the arts and all 82 00:04:13,000 --> 00:04:17,040 Speaker 1: kinds of music, so from opera, some quite obscure or 83 00:04:17,120 --> 00:04:20,680 Speaker 1: kestral things through to great Wellington bands who I liked, 84 00:04:21,640 --> 00:04:24,120 Speaker 1: and so to think like, here's this guy who's got 85 00:04:24,120 --> 00:04:27,520 Speaker 1: such broad interests and genuinely seem to and all things 86 00:04:27,560 --> 00:04:31,000 Speaker 1: start with what does the world need more of? And 87 00:04:31,440 --> 00:04:33,160 Speaker 1: how do I make that happen? And when you think 88 00:04:33,200 --> 00:04:36,800 Speaker 1: about it, even today, we never spend any time fussing 89 00:04:36,839 --> 00:04:40,159 Speaker 1: on an investment idea to say is this infrastructure or not? 90 00:04:40,720 --> 00:04:43,640 Speaker 1: What we say is is this something that's critical to society? 91 00:04:44,080 --> 00:04:46,120 Speaker 1: And is society going to need more of this over 92 00:04:46,120 --> 00:04:48,719 Speaker 1: the next few decades. And that leads you to places 93 00:04:48,920 --> 00:04:55,160 Speaker 1: like investing in renewable energy, secure storage of data, which 94 00:04:55,200 --> 00:04:57,880 Speaker 1: is actually a really great way to think about investing 95 00:04:57,880 --> 00:04:59,640 Speaker 1: because it's good for the world. But also you tend 96 00:04:59,640 --> 00:05:02,640 Speaker 1: to find and you make better returns because you're investing 97 00:05:02,680 --> 00:05:04,080 Speaker 1: in things the world's going to need more of. You're 98 00:05:04,080 --> 00:05:07,240 Speaker 1: always making putting your marginal dollar at work into something 99 00:05:07,279 --> 00:05:10,120 Speaker 1: that has got its own investment options inside it. 100 00:05:10,400 --> 00:05:13,680 Speaker 2: Yeah, So tell us about how Morrison is structured. You 101 00:05:13,760 --> 00:05:17,880 Speaker 2: well known for managing Infertil, So tell us about the group. 102 00:05:18,000 --> 00:05:21,719 Speaker 1: We started purely as the manager of Infertil and for 103 00:05:21,760 --> 00:05:26,200 Speaker 1: the longest time all Morrison was was the manager of Infertils. 104 00:05:26,240 --> 00:05:30,680 Speaker 1: Infertils unusual in the New Zealand market, probably usual in 105 00:05:30,680 --> 00:05:33,800 Speaker 1: most markets, and that it doesn't have its own management team. 106 00:05:34,000 --> 00:05:37,080 Speaker 1: What it has as an independent board and then Morrison 107 00:05:37,160 --> 00:05:41,560 Speaker 1: managing it under a contract and so that was set 108 00:05:41,640 --> 00:05:46,000 Speaker 1: up way back in nineteen ninety four. And then as 109 00:05:46,000 --> 00:05:49,919 Speaker 1: infertill has succeeded and growing, Morrison's always tried to invest 110 00:05:49,920 --> 00:05:52,880 Speaker 1: in building our team and capability ahead of Infertl's needs, 111 00:05:53,279 --> 00:05:55,640 Speaker 1: so that you're trying to find what's the next great idea. 112 00:05:56,600 --> 00:06:00,000 Speaker 1: So how we structured, we're basically two hundred and twenty 113 00:06:00,040 --> 00:06:03,080 Speaker 1: people around the world. A small set of people have 114 00:06:03,120 --> 00:06:06,120 Speaker 1: got very dedicated roles to specific funds like Infantal, so 115 00:06:06,200 --> 00:06:09,799 Speaker 1: Jason is the Infantal CEO with an Infantal finance function 116 00:06:09,839 --> 00:06:13,760 Speaker 1: underneath him. And then a bunch of people who are 117 00:06:13,800 --> 00:06:16,599 Speaker 1: out there just trying to find the best investment ideas 118 00:06:16,600 --> 00:06:19,480 Speaker 1: in the world. So those are people sitting in offices 119 00:06:19,520 --> 00:06:23,719 Speaker 1: in New York, London and Singapore, etc. Combing the world 120 00:06:23,720 --> 00:06:28,400 Speaker 1: for good investment ideas. You've got people who are just 121 00:06:28,480 --> 00:06:32,039 Speaker 1: kind of deep research thinkers who are saying ask that 122 00:06:32,080 --> 00:06:34,159 Speaker 1: question of what will the world need more of? So 123 00:06:34,200 --> 00:06:36,880 Speaker 1: they're doing quite top down research, and then you've got 124 00:06:36,880 --> 00:06:40,279 Speaker 1: people who are real kind of grease out of the 125 00:06:40,320 --> 00:06:44,800 Speaker 1: fingernail operators. So typically, whenever we've invested in a business 126 00:06:44,800 --> 00:06:48,160 Speaker 1: and you found a great CEO or a great chief 127 00:06:48,200 --> 00:06:53,520 Speaker 1: development officer or someone with really special skills, if you've 128 00:06:53,520 --> 00:06:55,600 Speaker 1: sold that business, we've tried to hold on to that person. 129 00:06:56,000 --> 00:06:57,799 Speaker 1: So you end up with a team that's this unusual 130 00:06:57,880 --> 00:07:02,040 Speaker 1: mix of some quite deal oriented finant people, some people 131 00:07:02,080 --> 00:07:04,320 Speaker 1: are these very kind of esoteric big picture thinkers, and 132 00:07:04,360 --> 00:07:09,760 Speaker 1: then some very practical operators. And where the magic happens, 133 00:07:09,760 --> 00:07:12,480 Speaker 1: and it's quite hard to make the mix work culturally. 134 00:07:12,720 --> 00:07:14,680 Speaker 1: Whether the magic happens is when you get those people 135 00:07:15,280 --> 00:07:18,760 Speaker 1: looking at the same problem from different angles and really 136 00:07:18,840 --> 00:07:21,320 Speaker 1: debating and trying to find the truth. And so we 137 00:07:21,360 --> 00:07:23,600 Speaker 1: spend a lot of time trying to find make sure 138 00:07:23,600 --> 00:07:26,880 Speaker 1: the people are smart at all those criteria, but actually 139 00:07:26,920 --> 00:07:30,560 Speaker 1: are people who like a debate like challenge can deal 140 00:07:30,600 --> 00:07:32,000 Speaker 1: with people who are different because it's always a lot 141 00:07:32,040 --> 00:07:33,640 Speaker 1: easier to just work with people who are like you. 142 00:07:34,480 --> 00:07:37,520 Speaker 1: But when you make that all happen, that works really beautifully. 143 00:07:37,760 --> 00:07:40,040 Speaker 2: And so how do you go about making investment decisions? 144 00:07:40,400 --> 00:07:43,760 Speaker 1: With a lot of angst and thoughtfulness. I took you 145 00:07:43,800 --> 00:07:48,040 Speaker 1: through an example of an investment process because I think 146 00:07:48,080 --> 00:07:51,720 Speaker 1: it is quite weird and unusual the way we've ended 147 00:07:51,800 --> 00:07:54,840 Speaker 1: up doing this, but it's evolved and we've got to 148 00:07:54,920 --> 00:07:59,840 Speaker 1: learn what's worked over thirty idears. So how did we 149 00:08:00,040 --> 00:08:05,360 Speaker 1: end up buying Canberra data centers? Way back and it's 150 00:08:05,360 --> 00:08:10,240 Speaker 1: probably about twenty twelve. Some of that research team was 151 00:08:10,360 --> 00:08:14,760 Speaker 1: charged with this question of we can see booming demand 152 00:08:14,960 --> 00:08:19,040 Speaker 1: for data storage and transmission, but we want to have 153 00:08:19,120 --> 00:08:22,160 Speaker 1: investments that are really downside protected and we know that 154 00:08:22,200 --> 00:08:24,200 Speaker 1: if you look at a lot of sectors that are 155 00:08:24,200 --> 00:08:26,960 Speaker 1: exposed to data, they're still very high risk or they 156 00:08:27,000 --> 00:08:29,680 Speaker 1: don't manage to maintain their margins. So that team did 157 00:08:29,680 --> 00:08:31,120 Speaker 1: a lot of research and what's going to drive the 158 00:08:31,120 --> 00:08:34,400 Speaker 1: growth of data? Then they looked at what are all 159 00:08:34,440 --> 00:08:37,080 Speaker 1: of the physical assets that you need to support that 160 00:08:37,520 --> 00:08:40,280 Speaker 1: and then said which have got the biggest barriers to entry, 161 00:08:41,040 --> 00:08:45,120 Speaker 1: strongest market positions. And conclusion from that work was they 162 00:08:45,160 --> 00:08:49,400 Speaker 1: really liked data centers, the fiber that connects up data 163 00:08:49,400 --> 00:08:54,800 Speaker 1: centers and telecommunications towers that mobile operators use. And then 164 00:08:54,840 --> 00:08:57,000 Speaker 1: within data centers we said, oh, some of this feels 165 00:08:57,000 --> 00:08:59,480 Speaker 1: too much like kind of a property play where you 166 00:08:59,480 --> 00:09:01,320 Speaker 1: know you've got a contract, but at some point your 167 00:09:01,320 --> 00:09:03,840 Speaker 1: tenants could move out. Some of it feels a little 168 00:09:03,840 --> 00:09:06,319 Speaker 1: bit too much like venture at too much risk exposure. 169 00:09:06,880 --> 00:09:09,240 Speaker 1: And so we wanted to find the lowest risk way 170 00:09:09,280 --> 00:09:12,240 Speaker 1: to invest in that because often what we're looking for 171 00:09:12,400 --> 00:09:17,080 Speaker 1: is very long term contracts or very strong market position 172 00:09:17,160 --> 00:09:20,560 Speaker 1: in a stable market structure, and that's not always what 173 00:09:20,600 --> 00:09:24,920 Speaker 1: you find with tech companies. And so the team found 174 00:09:24,920 --> 00:09:27,520 Speaker 1: this business called Canbra Data Centers, which back then was 175 00:09:28,320 --> 00:09:31,920 Speaker 1: two locations in Canberra. And when you look through the 176 00:09:31,960 --> 00:09:37,000 Speaker 1: government tendersment publishes all of their tenders publicly, you found 177 00:09:37,040 --> 00:09:40,880 Speaker 1: this company one about ninety percent of all government tenders 178 00:09:41,200 --> 00:09:42,760 Speaker 1: and you're like, okay, how is it when the government's 179 00:09:42,840 --> 00:09:45,920 Speaker 1: running an arms link competitive process one company's winning so much. 180 00:09:46,520 --> 00:09:48,920 Speaker 1: And what you found was they had done some really 181 00:09:48,920 --> 00:09:52,600 Speaker 1: smart positioning about how they set up their business. They 182 00:09:52,679 --> 00:09:56,560 Speaker 1: had the most secure operations, the most secure backup power, 183 00:09:57,920 --> 00:10:01,760 Speaker 1: They had got some very security conscious government agents as 184 00:10:01,800 --> 00:10:05,120 Speaker 1: early customers, and so other government agencies could see that 185 00:10:05,120 --> 00:10:06,920 Speaker 1: that was a safe pace to be and then they 186 00:10:07,000 --> 00:10:10,679 Speaker 1: got this ecosystem benefit of once one government agencies and 187 00:10:10,720 --> 00:10:12,480 Speaker 1: there others want to share data with them, and so 188 00:10:12,520 --> 00:10:14,640 Speaker 1: they want to be in the same location. Like wow, 189 00:10:14,720 --> 00:10:20,760 Speaker 1: that's fascinating. At that point, the original backers of that 190 00:10:20,920 --> 00:10:25,000 Speaker 1: business were looking to exit. We tried to buy it 191 00:10:25,040 --> 00:10:28,760 Speaker 1: and we failed. They sold to someone else, and we 192 00:10:28,760 --> 00:10:32,160 Speaker 1: were very disappointed. And the team kept talking to the 193 00:10:32,200 --> 00:10:34,800 Speaker 1: founder of that business, Greg Borer, who's this amazing entrepreneur, 194 00:10:34,840 --> 00:10:37,800 Speaker 1: for three years, and talking to the private equity firm 195 00:10:37,840 --> 00:10:40,360 Speaker 1: who had invested in it, and finally we got to 196 00:10:40,360 --> 00:10:43,760 Speaker 1: a point where they said, okay, we're thinking about an exit, 197 00:10:43,960 --> 00:10:45,640 Speaker 1: tell us your price, and they gave us a period 198 00:10:45,679 --> 00:10:48,880 Speaker 1: of exclusivity. So after like by then we'd probably been 199 00:10:48,880 --> 00:10:50,160 Speaker 1: work on that there for five years and then you 200 00:10:50,160 --> 00:10:52,719 Speaker 1: had this really intense six weeks of trying to get 201 00:10:52,720 --> 00:10:56,800 Speaker 1: the deal done. So yeah, so not everything is quite 202 00:10:56,880 --> 00:10:59,800 Speaker 1: as secure as route as that, but that's generally the principle. 203 00:11:00,360 --> 00:11:03,160 Speaker 1: Find a problem in the world's got to solve, Try 204 00:11:03,200 --> 00:11:06,080 Speaker 1: and find the business that's best positioned to solve that problem, 205 00:11:06,200 --> 00:11:09,559 Speaker 1: be willing to pay an absolutely fair price, and then 206 00:11:09,640 --> 00:11:12,960 Speaker 1: keep investing to grow it. So that business. Originally we 207 00:11:13,040 --> 00:11:16,199 Speaker 1: put eight hundred million Ausie dollars into it to buy it, 208 00:11:17,040 --> 00:11:20,400 Speaker 1: and we've continued to invest capital and grew it from 209 00:11:20,480 --> 00:11:24,520 Speaker 1: Canberra into Sydney and too Melbourne into New Zealand and 210 00:11:24,600 --> 00:11:26,520 Speaker 1: today it's worth over thirteen billion. 211 00:11:26,760 --> 00:11:28,520 Speaker 2: And it sounds like you played a bit of the 212 00:11:28,559 --> 00:11:31,880 Speaker 2: long game with it too, Like does Horizon play into 213 00:11:32,080 --> 00:11:32,880 Speaker 2: those decisions? 214 00:11:33,000 --> 00:11:37,360 Speaker 1: Yeah, Everything for us is a long game, starting with 215 00:11:37,400 --> 00:11:41,480 Speaker 1: the fact that the money we invest is very long term. 216 00:11:41,520 --> 00:11:44,200 Speaker 1: So if you think about the Morrison business overall, you've 217 00:11:44,240 --> 00:11:47,079 Speaker 1: got Infrato and then most of our other clients are 218 00:11:47,120 --> 00:11:50,839 Speaker 1: either sovereign wealth funds or pension funds and so they 219 00:11:50,920 --> 00:11:56,959 Speaker 1: typically have twenty thirty year horizons. So that's great because 220 00:11:57,000 --> 00:11:59,480 Speaker 1: it drives a culture for us of always thinking about 221 00:11:59,480 --> 00:12:02,040 Speaker 1: the long term. It's never like what's a business that 222 00:12:02,080 --> 00:12:04,640 Speaker 1: I could just buy, pull some cost out, fixed up 223 00:12:04,640 --> 00:12:06,600 Speaker 1: and sell. It's what's a business that I'd want to 224 00:12:06,600 --> 00:12:08,800 Speaker 1: own for decades, which then means you do do that 225 00:12:08,880 --> 00:12:11,640 Speaker 1: really long term thinking about finding the right business, and 226 00:12:11,679 --> 00:12:15,280 Speaker 1: then you're willing to spend two or three years trying 227 00:12:15,280 --> 00:12:17,640 Speaker 1: to own the best business rather than just responding to 228 00:12:17,679 --> 00:12:19,960 Speaker 1: what gets brought to you by investment banks. 229 00:12:20,080 --> 00:12:23,160 Speaker 2: Did geography play and play a part in that with 230 00:12:23,240 --> 00:12:24,120 Speaker 2: it being in Australia. 231 00:12:24,280 --> 00:12:30,080 Speaker 1: Yeah, definitely. Infrastructure is a kind of business where you 232 00:12:30,880 --> 00:12:34,439 Speaker 1: need to be local because you're owning assets that are 233 00:12:34,520 --> 00:12:38,800 Speaker 1: kind of critical to their communities. So for the longest time, 234 00:12:39,200 --> 00:12:43,120 Speaker 1: everything Morrison did was New Zealand through the eighties early nineties. 235 00:12:43,760 --> 00:12:48,400 Speaker 1: Then when Australia started doing its first infrastructure privatizations, Morrison 236 00:12:48,440 --> 00:12:50,160 Speaker 1: kind of jumped the ditch and set up here in 237 00:12:50,240 --> 00:12:54,040 Speaker 1: the nineties and was successful in those, and so we'd 238 00:12:54,120 --> 00:12:58,160 Speaker 1: become i think enough of part of the furniture in 239 00:12:58,160 --> 00:13:01,280 Speaker 1: Australia that when an asset like that came up, we 240 00:13:01,360 --> 00:13:04,520 Speaker 1: felt like we were natural owners. And clearly the Australian 241 00:13:04,520 --> 00:13:07,680 Speaker 1: government really cares who owns that data center, given that 242 00:13:07,760 --> 00:13:10,200 Speaker 1: their own government agencies are in it and they've got 243 00:13:10,280 --> 00:13:12,960 Speaker 1: very secure data loads. And so the fact in that 244 00:13:12,960 --> 00:13:18,640 Speaker 1: that we were local Australia and New Zealand local infratill 245 00:13:18,760 --> 00:13:22,560 Speaker 1: is Australia, New Zealand and the investment partner that we 246 00:13:22,640 --> 00:13:25,000 Speaker 1: brought for in Fronto that was Commonwealth Super So that's 247 00:13:25,000 --> 00:13:28,439 Speaker 1: the pension scheme for government and military employees. So it's 248 00:13:28,480 --> 00:13:31,240 Speaker 1: kind of a perfect match with the end customers of 249 00:13:31,280 --> 00:13:35,320 Speaker 1: that business. So today obviously our footprints global, so we 250 00:13:35,400 --> 00:13:37,400 Speaker 1: look at those same ideas and a lot of different locations. 251 00:13:37,400 --> 00:13:40,800 Speaker 1: But back in twenty thirteen when we started looking at that, 252 00:13:41,240 --> 00:13:42,720 Speaker 1: we wouldn't have looked at it if it wasn't in 253 00:13:42,760 --> 00:13:43,800 Speaker 1: Australia and New Zealand. 254 00:13:43,880 --> 00:13:46,840 Speaker 2: How does it differ between the private companies and the 255 00:13:46,840 --> 00:13:49,199 Speaker 2: public companies knowing that you've got a mix of both. 256 00:13:49,600 --> 00:13:56,640 Speaker 1: We like investing in private companies are unlisted companies and 257 00:13:56,679 --> 00:13:59,920 Speaker 1: the reason for that is it's going to sound nasty. 258 00:14:00,040 --> 00:14:03,079 Speaker 1: We like control, but what I really mean by that 259 00:14:04,000 --> 00:14:05,960 Speaker 1: we want to invest in things where you can fundamentally 260 00:14:05,960 --> 00:14:09,000 Speaker 1: make the business better and drive the direction of the business, 261 00:14:09,040 --> 00:14:12,240 Speaker 1: which means you want to be able to determine strategy. 262 00:14:12,320 --> 00:14:14,960 Speaker 1: You want to be able to determine who's in the 263 00:14:14,960 --> 00:14:18,800 Speaker 1: management team, having great people there and work in partnership 264 00:14:18,800 --> 00:14:21,480 Speaker 1: with them. So that works really well in private markets, 265 00:14:21,480 --> 00:14:25,080 Speaker 1: so you can have a long term perspective infratil. Is 266 00:14:25,760 --> 00:14:30,200 Speaker 1: this quite amazing b strip because infertil is a daily 267 00:14:30,240 --> 00:14:34,840 Speaker 1: liquid stock that you can buy for a minimum unit 268 00:14:34,920 --> 00:14:38,440 Speaker 1: of whatever it is today eleven dollars fifty, but gives 269 00:14:38,520 --> 00:14:42,880 Speaker 1: you access to unlisted private market assets with this long duration, 270 00:14:43,800 --> 00:14:45,920 Speaker 1: and that's really rere in fact one of the big 271 00:14:45,960 --> 00:14:48,080 Speaker 1: trends in our industry of infrastructure funds and management. At 272 00:14:48,120 --> 00:14:51,560 Speaker 1: the moment, all the US firms are trying to create 273 00:14:51,680 --> 00:14:54,160 Speaker 1: these what they call semi liquid vehicles that will attract 274 00:14:54,640 --> 00:14:58,200 Speaker 1: retail and high net wealth money into them, and they're 275 00:14:58,240 --> 00:15:01,760 Speaker 1: doing all these really arcane struck suring to create something 276 00:15:01,760 --> 00:15:04,360 Speaker 1: which looks like what INFRAT was in nineteen ninety four, 277 00:15:04,400 --> 00:15:07,920 Speaker 1: but not quite as liquid now. That's partly to do 278 00:15:08,040 --> 00:15:10,040 Speaker 1: with the US regulation that means you couldn't create an 279 00:15:10,080 --> 00:15:13,240 Speaker 1: inftill there, but it means inflil is this really cool 280 00:15:13,280 --> 00:15:15,120 Speaker 1: thing that you know, you can sit there in Australia 281 00:15:15,160 --> 00:15:17,400 Speaker 1: New Zealand as a retail investor and get access to 282 00:15:17,440 --> 00:15:20,400 Speaker 1: something that otherwise only the biggest institutional investors in the 283 00:15:20,400 --> 00:15:21,000 Speaker 1: world can do. 284 00:15:21,200 --> 00:15:25,000 Speaker 2: You're also credited with integrating sustainable investment in a broader sense. 285 00:15:25,160 --> 00:15:27,760 Speaker 2: Can you tell us about Morrison's philosophy. 286 00:15:27,280 --> 00:15:31,960 Speaker 1: In that Yeah, it starts from Lloyd Morrison and that 287 00:15:32,120 --> 00:15:36,040 Speaker 1: idea of we will only do well we're investing in 288 00:15:36,080 --> 00:15:38,640 Speaker 1: things that the world needs more of. And if you're 289 00:15:38,640 --> 00:15:41,120 Speaker 1: investing in things the world needs less of. You should 290 00:15:41,120 --> 00:15:44,080 Speaker 1: anticipate that. Sooner or later that catches up with you. You know, 291 00:15:44,120 --> 00:15:48,080 Speaker 1: regulators toughened rules on you. Whereas if you're buying investing 292 00:15:48,120 --> 00:15:51,040 Speaker 1: in something the world needs more of, you can buy 293 00:15:51,480 --> 00:15:53,440 Speaker 1: an initial business, but then keep putting more and more 294 00:15:53,480 --> 00:15:55,920 Speaker 1: capital into it, normally at higher average returns because you 295 00:15:55,960 --> 00:15:57,880 Speaker 1: really know what you're doing as you grow that business. 296 00:15:58,560 --> 00:16:01,400 Speaker 1: So that leads you to know what are the big 297 00:16:01,400 --> 00:16:04,880 Speaker 1: problems the world needs to solve. Decapitalization is an obvious one. 298 00:16:05,320 --> 00:16:07,640 Speaker 1: And having got our start in New Zealand, like you've 299 00:16:07,640 --> 00:16:10,080 Speaker 1: got this weird superpower, right, which New Zealand's got a 300 00:16:10,080 --> 00:16:12,720 Speaker 1: lot of rain and wind and not so much coal. 301 00:16:13,200 --> 00:16:16,680 Speaker 1: So New Zealand's already ninety percent renewables and we could 302 00:16:16,720 --> 00:16:19,320 Speaker 1: start investing in renewables in nineteen ninety four, and then 303 00:16:19,360 --> 00:16:20,800 Speaker 1: as the rest of the world has caught up with that, 304 00:16:20,840 --> 00:16:22,440 Speaker 1: we've said, well, here's a problem the world's got to 305 00:16:22,440 --> 00:16:25,000 Speaker 1: solve that we've got an advantage in. So that's the 306 00:16:25,040 --> 00:16:29,160 Speaker 1: starting point. Is actually, it's not a sustainability idea, it's 307 00:16:29,160 --> 00:16:32,560 Speaker 1: actually just an investment idea. I think where a lot 308 00:16:32,560 --> 00:16:34,920 Speaker 1: of our industries got itself into trouble in recent years 309 00:16:35,240 --> 00:16:38,000 Speaker 1: has been where it's tried to tick the box on 310 00:16:38,320 --> 00:16:43,120 Speaker 1: ESG and market ESG without actually thinking does this make 311 00:16:43,160 --> 00:16:45,840 Speaker 1: my investment better? So for us, we've always just tried 312 00:16:45,880 --> 00:16:49,720 Speaker 1: to stay strictly on the what is, what will good 313 00:16:49,760 --> 00:16:51,360 Speaker 1: deliver the best returns and what are we good at? 314 00:16:52,080 --> 00:16:54,960 Speaker 2: So while we're pulling the thread of you know, big 315 00:16:55,000 --> 00:16:58,120 Speaker 2: ideas well, what's going on in the broader environment, we 316 00:16:58,200 --> 00:17:00,960 Speaker 2: are seeing a lot of political volatility. You know, is 317 00:17:00,960 --> 00:17:02,960 Speaker 2: there anything you know what worries you the most about 318 00:17:03,000 --> 00:17:06,080 Speaker 2: that or excites you the most about that? 319 00:17:06,440 --> 00:17:11,080 Speaker 1: Try and be an optimist. So the optimistic point of 320 00:17:11,160 --> 00:17:19,600 Speaker 1: view is wherever there's dislocation, there's opportunities, and wherever people 321 00:17:19,640 --> 00:17:24,439 Speaker 1: are taking simplistic, top down views, if you're writing the detail, 322 00:17:24,520 --> 00:17:31,320 Speaker 1: you'll find opportunity. So for example, right now, the last 323 00:17:31,320 --> 00:17:34,880 Speaker 1: thing most investors want to hear about is a US 324 00:17:34,960 --> 00:17:40,960 Speaker 1: renewable energy idea, because they're like, don't Trump hate renewbal energy. 325 00:17:41,600 --> 00:17:44,960 Speaker 1: But if you can actually work through the detail of 326 00:17:45,000 --> 00:17:47,359 Speaker 1: what things will do well and what won't and exactly 327 00:17:47,520 --> 00:17:51,720 Speaker 1: how will tax credits work and what energy demand from 328 00:17:51,840 --> 00:17:56,080 Speaker 1: US data centers means that can they Actually I'll turn 329 00:17:56,080 --> 00:17:59,359 Speaker 1: inshing fact, there's all this talk about we're going to 330 00:17:59,440 --> 00:18:04,520 Speaker 1: not to renew will do gas generation. If you wanted 331 00:18:04,600 --> 00:18:10,480 Speaker 1: to buy a gas turbine for a power plant right now, 332 00:18:10,520 --> 00:18:12,639 Speaker 1: the earliest delivery you'd get would be twenty twenty nine 333 00:18:12,720 --> 00:18:17,119 Speaker 1: or twenty thirty. So one way or another, if you 334 00:18:17,200 --> 00:18:20,960 Speaker 1: need energy to fuel the data center, you're going to 335 00:18:21,000 --> 00:18:24,800 Speaker 1: be using some combination of solar wind batteries unless you 336 00:18:24,800 --> 00:18:26,680 Speaker 1: happen to live in the area nuclear plant that can 337 00:18:27,160 --> 00:18:30,320 Speaker 1: has got access capacity. So you kind of work through 338 00:18:30,320 --> 00:18:32,440 Speaker 1: all of that, and you see there's actually these really 339 00:18:32,520 --> 00:18:37,720 Speaker 1: interesting micro opportunities that seem quite counterintuitive. So that's the 340 00:18:37,720 --> 00:18:40,439 Speaker 1: optimist in anything great opportunity when everyone else is going 341 00:18:40,480 --> 00:18:43,520 Speaker 1: to running. One way to work out where the opportunity is. Underneath. 342 00:18:45,480 --> 00:18:51,000 Speaker 1: The deep worry I have is there's a risk that 343 00:18:51,840 --> 00:18:55,719 Speaker 1: some things which have underpinned the whole global capital system 344 00:18:56,440 --> 00:19:01,200 Speaker 1: get strained and ultimately, you know, people always talk about 345 00:19:01,280 --> 00:19:05,920 Speaker 1: US exceptionalism, like what does US exceptionalism really mean? Apart 346 00:19:05,960 --> 00:19:09,439 Speaker 1: from being a wonderful dynamic economy, which it definitely is, 347 00:19:10,240 --> 00:19:15,280 Speaker 1: it means because you've got the reserve currency every year 348 00:19:15,359 --> 00:19:18,680 Speaker 1: you get to buy all the world's stuff, run whatever 349 00:19:18,680 --> 00:19:21,960 Speaker 1: it is about a seven percent budget deficit, and then 350 00:19:22,040 --> 00:19:24,879 Speaker 1: hand them bits of paper saying I'll give you money 351 00:19:24,960 --> 00:19:27,840 Speaker 1: later in ten or twenty years, and you keep low 352 00:19:27,880 --> 00:19:31,520 Speaker 1: interest rates because you're the world's kind of reserve currency. 353 00:19:32,240 --> 00:19:37,680 Speaker 1: I think that if the combination of lack of trust 354 00:19:37,880 --> 00:19:43,760 Speaker 1: in US institutions along with lack of fiscal discipline means 355 00:19:43,760 --> 00:19:47,720 Speaker 1: that you have a blowout in the US's ability to 356 00:19:47,760 --> 00:19:51,880 Speaker 1: borrow long term, I just think that will uncover all 357 00:19:51,960 --> 00:19:55,359 Speaker 1: kinds of problems in the financial system that we haven't contemplated. 358 00:19:55,359 --> 00:19:57,600 Speaker 1: Because no one thought that US ten year rates would 359 00:19:57,600 --> 00:20:00,600 Speaker 1: go above a certain number. So that's probably the biggest 360 00:20:00,840 --> 00:20:04,119 Speaker 1: where in everything we do basically prices off US ten 361 00:20:04,200 --> 00:20:06,160 Speaker 1: year bond rates, you then kind of adding your risk 362 00:20:06,200 --> 00:20:08,760 Speaker 1: adjustice on top of that. What happens if that's no 363 00:20:08,840 --> 00:20:10,840 Speaker 1: longer considered the risk free rate in the world. 364 00:20:11,400 --> 00:20:13,200 Speaker 2: How do you think about that? Why do you think 365 00:20:13,240 --> 00:20:13,680 Speaker 2: through that? 366 00:20:14,000 --> 00:20:19,680 Speaker 1: There's no simple answer other than we're being really cautious. 367 00:20:22,000 --> 00:20:27,560 Speaker 1: I don't think there's any really clear kind of economic 368 00:20:27,640 --> 00:20:29,480 Speaker 1: winners in the long run from that, Like you love 369 00:20:29,600 --> 00:20:32,600 Speaker 1: that if you go well, the US might lose in Germany, 370 00:20:32,600 --> 00:20:37,119 Speaker 1: White win. But I think everyone has problems if you 371 00:20:37,240 --> 00:20:40,040 Speaker 1: end up in that situation. So you just have to 372 00:20:40,080 --> 00:20:43,360 Speaker 1: be cautious. So it means you want to keep borrowing 373 00:20:43,440 --> 00:20:45,720 Speaker 1: levels low on your businesses, You want to understand any 374 00:20:45,760 --> 00:20:48,480 Speaker 1: refinancing opportunities you want to that are coming. You want 375 00:20:48,480 --> 00:20:50,680 Speaker 1: to be really kind of greedy and selfish about where 376 00:20:50,720 --> 00:20:54,040 Speaker 1: you invest. So we're last year you might have accepted 377 00:20:54,040 --> 00:20:55,639 Speaker 1: a return of X. Now it might be X plus 378 00:20:55,640 --> 00:20:59,680 Speaker 1: two hundred or three hundred basis points, but it probably 379 00:20:59,720 --> 00:21:01,959 Speaker 1: does had a really great environment from investing if you're 380 00:21:02,000 --> 00:21:06,080 Speaker 1: doing it carefully. But yeah, definitely rest to the downside. 381 00:21:06,440 --> 00:21:09,359 Speaker 2: Infrastructure is having a moment. What do you think is 382 00:21:09,359 --> 00:21:13,919 Speaker 2: behind the global surch of interest from investors? Yeah, I 383 00:21:13,920 --> 00:21:15,639 Speaker 2: mean you've always been in this infrastructure. 384 00:21:15,720 --> 00:21:18,000 Speaker 1: Yeah, that's the weird thing, right. Like one of one 385 00:21:18,080 --> 00:21:21,960 Speaker 1: of our favorite clients here in Australia said to me 386 00:21:22,000 --> 00:21:25,919 Speaker 1: a few years ago about Morrison, it's like he's like 387 00:21:25,960 --> 00:21:28,000 Speaker 1: me at Child of the nineties. He said, you know, 388 00:21:28,080 --> 00:21:30,280 Speaker 1: it's like when there's that band you love all of 389 00:21:30,280 --> 00:21:33,000 Speaker 1: a sudden everyone heard about and you're like, ah, they 390 00:21:33,119 --> 00:21:35,960 Speaker 1: used to be my thing. Like that's how you feel 391 00:21:35,960 --> 00:21:37,879 Speaker 1: a bit about infrastructure like it used to be this weird, 392 00:21:37,880 --> 00:21:39,680 Speaker 1: obscure accid class that people don't even know it was 393 00:21:39,720 --> 00:21:43,320 Speaker 1: an accid class and underground. Yeah, So I think there's 394 00:21:43,359 --> 00:21:47,280 Speaker 1: a couple of things going on. One is everyone is 395 00:21:47,359 --> 00:21:51,720 Speaker 1: realizing there's this massive investment required. So if the world's 396 00:21:51,720 --> 00:21:54,960 Speaker 1: going to decarbonize, if the world's going to get much 397 00:21:55,040 --> 00:21:58,360 Speaker 1: more efficient in terms of its kind of core physical 398 00:21:58,400 --> 00:22:02,439 Speaker 1: infrastructure like roads, etc. A lot of capital has to 399 00:22:02,480 --> 00:22:07,359 Speaker 1: go in. Also, the asset class is now expanding to 400 00:22:07,359 --> 00:22:09,720 Speaker 1: cover things like data centers that hadn't been thought of before, 401 00:22:10,480 --> 00:22:13,119 Speaker 1: So it feels like enormous amount of capital to be 402 00:22:13,160 --> 00:22:17,719 Speaker 1: invested there for a good investment opportunity. The other thing 403 00:22:17,720 --> 00:22:21,280 Speaker 1: that's going on, I think is Australia has been a 404 00:22:21,280 --> 00:22:25,280 Speaker 1: world leader, So the average Australian superannuation fund probably has 405 00:22:25,560 --> 00:22:30,080 Speaker 1: fifteen to eighteen percent of its portfolio invested in infrastructure. 406 00:22:31,160 --> 00:22:33,840 Speaker 1: That's not the case around the world, so US pension 407 00:22:33,840 --> 00:22:37,639 Speaker 1: funds might be at two percent. Australia was just really 408 00:22:37,680 --> 00:22:40,960 Speaker 1: early at privatizing airports and things, and because the US 409 00:22:40,960 --> 00:22:43,520 Speaker 1: has been much slower in those things, the asset class 410 00:22:43,560 --> 00:22:46,879 Speaker 1: hasn't really developed and so as it started to emerge, 411 00:22:47,240 --> 00:22:49,680 Speaker 1: a lot of the big global asset managers have said, 412 00:22:50,200 --> 00:22:52,119 Speaker 1: while there this thing that's currently two percent grow to 413 00:22:52,160 --> 00:22:55,439 Speaker 1: fifteen percent of growing capital pools, and this demand for 414 00:22:55,480 --> 00:22:57,439 Speaker 1: where that money is going to go, we ought to 415 00:22:57,440 --> 00:23:01,240 Speaker 1: get into it. So you're seeing a lot of investors 416 00:23:01,280 --> 00:23:03,119 Speaker 1: want to go there, but also the kind of fund 417 00:23:03,119 --> 00:23:05,600 Speaker 1: managers want to build businesses there, so they're hyping it up, 418 00:23:05,640 --> 00:23:09,639 Speaker 1: which is ultimately probably a good thing for us. More competition, 419 00:23:09,760 --> 00:23:11,200 Speaker 1: but more attention in the space. 420 00:23:11,760 --> 00:23:13,560 Speaker 2: You know, you've got a real strength and digital and 421 00:23:13,560 --> 00:23:17,920 Speaker 2: connectivity assets. How do you balance the environmental footprint on 422 00:23:18,359 --> 00:23:20,280 Speaker 2: those that the data centers have. 423 00:23:20,480 --> 00:23:25,920 Speaker 1: Yeah, that's a really big question. So energy consumption of 424 00:23:26,000 --> 00:23:33,720 Speaker 1: data centers is high and is growing rapidly with AI 425 00:23:34,520 --> 00:23:39,760 Speaker 1: and water use can be very high for cooling that equipment. Again, 426 00:23:39,880 --> 00:23:42,360 Speaker 1: some of these things are better to be lucky than good, 427 00:23:42,400 --> 00:23:44,840 Speaker 1: Like we happen to come from New Zealand, which was 428 00:23:44,880 --> 00:23:47,480 Speaker 1: good for renewables and data center is our first data 429 00:23:47,480 --> 00:23:51,760 Speaker 1: center coming from Australia. Greg Border, the entrepreneur there, actually 430 00:23:51,800 --> 00:23:55,679 Speaker 1: was the first person to build water cooled data centers 431 00:23:55,720 --> 00:23:58,600 Speaker 1: that use a closed loop. So you've got you're not 432 00:23:59,200 --> 00:24:01,520 Speaker 1: checking water out of every day, you're kind of rotating 433 00:24:01,520 --> 00:24:04,280 Speaker 1: it around the loop. That turns out to be perfect 434 00:24:04,320 --> 00:24:09,240 Speaker 1: for AI and excellent for the environment. So we feel 435 00:24:09,280 --> 00:24:12,160 Speaker 1: like in that one, actually the focus on that area 436 00:24:12,280 --> 00:24:17,280 Speaker 1: could be a benefit with renewable energy or with the 437 00:24:17,400 --> 00:24:21,119 Speaker 1: risk of a lot of carbon footprint from your data centers. Actually, 438 00:24:21,119 --> 00:24:24,800 Speaker 1: your customers are your best friends. So the Hyperscalis, the Microsoft, 439 00:24:24,800 --> 00:24:28,240 Speaker 1: the Amazons, etc. Generally all have their own net zero 440 00:24:28,280 --> 00:24:32,359 Speaker 1: commitments and so they are wanting you to show that 441 00:24:32,440 --> 00:24:36,520 Speaker 1: you can source renewable energy for your data centers. So 442 00:24:36,520 --> 00:24:38,960 Speaker 1: you've still got the challenges of can the grid just 443 00:24:39,160 --> 00:24:42,000 Speaker 1: keep up with demand? But I think we will actually 444 00:24:42,000 --> 00:24:45,040 Speaker 1: be a driver of grenification of the grids through our 445 00:24:45,080 --> 00:24:49,359 Speaker 1: data centers. But yes, really it's the kind of thing 446 00:24:49,359 --> 00:24:52,639 Speaker 1: where you can quickly lose your social license. So you 447 00:24:52,680 --> 00:24:56,840 Speaker 1: saw in the past, Ireland and Singapore put in bands 448 00:24:56,880 --> 00:24:59,399 Speaker 1: on new data centers for a period because there just 449 00:24:59,480 --> 00:25:02,080 Speaker 1: wasn't enough energy to go around. And when that's putting 450 00:25:02,119 --> 00:25:05,880 Speaker 1: people's home power bills up, it's quite an easy thing 451 00:25:05,880 --> 00:25:08,240 Speaker 1: to turn off. So means we also need to be 452 00:25:08,280 --> 00:25:11,920 Speaker 1: part of the solution with our renewble energy business, How are. 453 00:25:11,840 --> 00:25:15,200 Speaker 2: You thinking about the developments in AI and infrastructure. 454 00:25:17,080 --> 00:25:19,680 Speaker 1: So there's a few different ways. The first and most 455 00:25:19,680 --> 00:25:22,240 Speaker 1: direct way of experiencing it is through the data center business, 456 00:25:22,400 --> 00:25:26,240 Speaker 1: and that is just insane if you look at this 457 00:25:26,520 --> 00:25:29,960 Speaker 1: rate of advances and therefore the rate of growth of 458 00:25:30,040 --> 00:25:33,679 Speaker 1: demand for computational power. I think we're kind of only 459 00:25:33,880 --> 00:25:35,679 Speaker 1: just at the very start of what that's all going 460 00:25:35,760 --> 00:25:38,520 Speaker 1: to mean. There's still a bunch of concernadis right, like 461 00:25:38,760 --> 00:25:42,280 Speaker 1: when deep seat came out, it showed that you could 462 00:25:42,600 --> 00:25:44,880 Speaker 1: do a lot of stuff more efficiently, and I expect 463 00:25:44,880 --> 00:25:48,239 Speaker 1: that that efficient frontier will keep moving. So it's kind 464 00:25:48,240 --> 00:25:53,919 Speaker 1: of a battle between exponentially growing demand and exponentially improving efficiency. 465 00:25:53,960 --> 00:25:57,560 Speaker 1: But ultimately, in that I think the demand's just going 466 00:25:57,560 --> 00:25:59,879 Speaker 1: to rise because as things can get efficient and cheaper, 467 00:26:00,160 --> 00:26:03,680 Speaker 1: we'll use more of them. So AI will be massive 468 00:26:03,680 --> 00:26:06,199 Speaker 1: for the data center business. We're starting to see it 469 00:26:06,320 --> 00:26:09,920 Speaker 1: roll through now through some of our other digital infrastructure businesses, 470 00:26:10,000 --> 00:26:14,120 Speaker 1: like booming demand for fiber networks that connect end users 471 00:26:14,160 --> 00:26:18,199 Speaker 1: to data centers, for example. And then we're seeing it 472 00:26:18,200 --> 00:26:21,639 Speaker 1: in our renewable energy business, like our biggest customers for 473 00:26:21,680 --> 00:26:24,240 Speaker 1: our renewable energy business in the US are the same 474 00:26:24,280 --> 00:26:26,720 Speaker 1: as our biggest customers for our data center business in Australia, 475 00:26:26,800 --> 00:26:30,320 Speaker 1: you know, it's the HYPERSCALUS. So that's all hitting us 476 00:26:30,400 --> 00:26:33,359 Speaker 1: kind of first, there is in the question of how 477 00:26:33,359 --> 00:26:36,679 Speaker 1: do you use AI within the businesses. You know, I 478 00:26:36,720 --> 00:26:41,879 Speaker 1: talked about those kind of creative strategic research thinkers you 479 00:26:41,880 --> 00:26:44,199 Speaker 1: can imagine that are some of our best experimenters, and 480 00:26:44,200 --> 00:26:48,080 Speaker 1: they're doing things like whenever anyone in our team globally 481 00:26:48,320 --> 00:26:51,320 Speaker 1: comes across an interesting research report on anything relevant, it 482 00:26:51,359 --> 00:26:54,679 Speaker 1: all comes into central place, gets ingested so that you 483 00:26:54,760 --> 00:26:59,720 Speaker 1: can then start asking creative prompts about what we're experiencing 484 00:27:00,080 --> 00:27:04,080 Speaker 1: never in the world. Yes, it feels like we're right 485 00:27:04,080 --> 00:27:08,159 Speaker 1: at the beginning of something that will be transformational for 486 00:27:08,160 --> 00:27:10,040 Speaker 1: our portfolio but also for ourn business. 487 00:27:10,280 --> 00:27:12,440 Speaker 2: Feels like the transformation is coming back. We're not quite 488 00:27:12,480 --> 00:27:14,239 Speaker 2: like we've got. On the one hand, people you know, 489 00:27:14,440 --> 00:27:18,359 Speaker 2: using it to you know, create Barbie Doll versions of 490 00:27:18,440 --> 00:27:22,320 Speaker 2: themselves or like what Barbie would I be? And then 491 00:27:22,359 --> 00:27:25,919 Speaker 2: on the other hand these incredible business efficiencies and I 492 00:27:25,920 --> 00:27:28,960 Speaker 2: think we're only coming to know the ways that it 493 00:27:28,960 --> 00:27:30,200 Speaker 2: will transform. 494 00:27:29,800 --> 00:27:33,119 Speaker 1: Our world exactly. And one of the things that was 495 00:27:33,119 --> 00:27:35,879 Speaker 1: really opening in the last while, right when when we 496 00:27:35,960 --> 00:27:38,960 Speaker 1: all first experienced chat GPT and then Microsoft pulled off 497 00:27:38,960 --> 00:27:43,119 Speaker 1: that amazing deal with open Ai. I think we'd started 498 00:27:43,119 --> 00:27:45,040 Speaker 1: to think this is a kind of like winner takes 499 00:27:45,080 --> 00:27:47,640 Speaker 1: all space, and there's going to be one winning LLM 500 00:27:48,320 --> 00:27:52,440 Speaker 1: and one winning hyperscala out of it. And these days 501 00:27:52,480 --> 00:27:56,880 Speaker 1: you see there's probably six l lms that every few 502 00:27:56,920 --> 00:27:58,920 Speaker 1: months on releases an update and they become the best 503 00:27:58,960 --> 00:28:01,560 Speaker 1: in the world at some different air So really dynamic, 504 00:28:01,560 --> 00:28:03,399 Speaker 1: which probably means it's not when it takes all for 505 00:28:03,440 --> 00:28:08,000 Speaker 1: the llms. Probably the efficiency benefits all flow out to 506 00:28:09,080 --> 00:28:12,520 Speaker 1: companies using these products, right, So I think that's really 507 00:28:12,520 --> 00:28:16,000 Speaker 1: good for the economy, probably drives productivity. Hopefully it's something 508 00:28:16,240 --> 00:28:18,800 Speaker 1: countering those higher interest rates that you might otherwise get 509 00:28:19,720 --> 00:28:21,840 Speaker 1: through all the other fiscal issues in the world. 510 00:28:22,200 --> 00:28:24,480 Speaker 2: Are there any other interesting areas that you're investing in 511 00:28:24,480 --> 00:28:25,199 Speaker 2: that we haven't touched on. 512 00:28:25,560 --> 00:28:29,600 Speaker 1: You were doing really interesting stuff in healthcare related infrastructure, 513 00:28:31,200 --> 00:28:36,520 Speaker 1: So that's one of those spaces where really clear problem 514 00:28:36,600 --> 00:28:42,400 Speaker 1: to solve. As populations age, there's more and more healthcare 515 00:28:42,440 --> 00:28:45,200 Speaker 1: requirement and the government's budget to pay for it is 516 00:28:45,280 --> 00:28:50,240 Speaker 1: limited and that was what led us first to diagnostic imaging. 517 00:28:50,280 --> 00:28:54,440 Speaker 1: So radiologists think about, for anything, bring your spill x rator, 518 00:28:54,560 --> 00:29:00,640 Speaker 1: pet scans. That's an area where early detect and early 519 00:29:00,680 --> 00:29:04,400 Speaker 1: intervention can really reduce the system wide costs of disease. 520 00:29:05,160 --> 00:29:06,960 Speaker 1: And so then we went about saying like, how do 521 00:29:06,960 --> 00:29:10,760 Speaker 1: you find really nice, defensive businesses with good market positions 522 00:29:11,120 --> 00:29:15,000 Speaker 1: to do that. And that's got a real global growth 523 00:29:15,040 --> 00:29:19,280 Speaker 1: story because radiology has moved from being something where you 524 00:29:19,760 --> 00:29:21,920 Speaker 1: go to your local clinic and they take an X 525 00:29:22,000 --> 00:29:24,240 Speaker 1: ray and the radiologist in the next room read your 526 00:29:24,280 --> 00:29:27,760 Speaker 1: scan to being something where that scan can be read 527 00:29:28,280 --> 00:29:33,440 Speaker 1: by appropriately qualified for your jurisdiction doctor anywhere in the world. 528 00:29:34,200 --> 00:29:37,920 Speaker 1: And so for example, as you've got Australia New Zealand 529 00:29:37,960 --> 00:29:42,680 Speaker 1: qualified radiologists sitting in London, they can be working on 530 00:29:42,720 --> 00:29:45,080 Speaker 1: the scans at are urgent overnight that otherwise you pay 531 00:29:45,120 --> 00:29:47,760 Speaker 1: two or three times the amount for. And then if 532 00:29:47,760 --> 00:29:50,520 Speaker 1: you've got these qualified people in New Zealand and you 533 00:29:50,520 --> 00:29:52,200 Speaker 1: bring a few people from London, you can actually serve 534 00:29:52,480 --> 00:29:55,080 Speaker 1: the UK market. So I think that's one of those 535 00:29:55,160 --> 00:29:59,040 Speaker 1: ideas that's globally scalable. From a base at the bottom 536 00:29:59,040 --> 00:30:00,760 Speaker 1: of the world. In fact, the the world's a bit 537 00:30:00,760 --> 00:30:02,200 Speaker 1: of an advantage for the time zones. 538 00:30:03,120 --> 00:30:05,640 Speaker 2: You've got to let stuff go to how do you 539 00:30:05,640 --> 00:30:06,680 Speaker 2: feel about letting stuff go? 540 00:30:07,120 --> 00:30:09,240 Speaker 1: So because we are such long term investors and you 541 00:30:09,280 --> 00:30:11,600 Speaker 1: do everything with a perspective of onwing it for twenty 542 00:30:11,680 --> 00:30:15,360 Speaker 1: or thirty years, I think one of our failings is 543 00:30:16,160 --> 00:30:20,240 Speaker 1: we don't always think about exit as actively as others 544 00:30:20,760 --> 00:30:24,040 Speaker 1: think about normal private equity managers who buy something, fix 545 00:30:24,080 --> 00:30:25,640 Speaker 1: it up, flick it on in three or five years 546 00:30:25,640 --> 00:30:28,760 Speaker 1: and collect their carry. They are always thinking about the sale. 547 00:30:30,040 --> 00:30:32,960 Speaker 1: That's just not the way we're built. So it does 548 00:30:33,160 --> 00:30:37,200 Speaker 1: mean we need to be really disciplined. So you know 549 00:30:37,360 --> 00:30:40,200 Speaker 1: what does we now do For every asset, no matter 550 00:30:40,200 --> 00:30:42,960 Speaker 1: how wonderful it is, We do an annual buy, sell, 551 00:30:43,040 --> 00:30:46,600 Speaker 1: hold review. And sometimes a question can be actually, this 552 00:30:46,640 --> 00:30:50,160 Speaker 1: is a great business, therefore you should sell it. So 553 00:30:50,360 --> 00:30:54,160 Speaker 1: think about Tilt Renewables. You know that was close to 554 00:30:54,160 --> 00:30:56,840 Speaker 1: my heart. That literally we work for that management team 555 00:30:56,880 --> 00:30:59,200 Speaker 1: to create it, to pull it out of TrustPower and 556 00:30:59,240 --> 00:31:03,320 Speaker 1: make this thing. We built it up, got it to 557 00:31:03,360 --> 00:31:05,680 Speaker 1: a point where you thought it was the best renewable 558 00:31:05,760 --> 00:31:08,760 Speaker 1: energy business in Australia and New Zealand. So then to 559 00:31:08,800 --> 00:31:11,400 Speaker 1: be willing when people started making your offers for it 560 00:31:11,440 --> 00:31:13,719 Speaker 1: to entertain them was a bit of an emotional stretch. 561 00:31:14,160 --> 00:31:18,240 Speaker 1: But then when they started coming, you're like, actually, I 562 00:31:18,280 --> 00:31:20,200 Speaker 1: think this with more to them than it is to 563 00:31:20,280 --> 00:31:24,240 Speaker 1: the Infantal shareholders. We can always go again, And so 564 00:31:24,400 --> 00:31:28,320 Speaker 1: being willing to do that and redeploy that capital. I 565 00:31:28,320 --> 00:31:31,239 Speaker 1: think one of the good things about the trust that 566 00:31:31,280 --> 00:31:33,600 Speaker 1: the market has built over the years and the Infantal 567 00:31:33,680 --> 00:31:37,719 Speaker 1: board and the Mount Morrison team is they do believe 568 00:31:37,800 --> 00:31:41,320 Speaker 1: that we can reinvest well. So it's not like you 569 00:31:41,400 --> 00:31:43,959 Speaker 1: sell things and they immediately say give us all that 570 00:31:44,000 --> 00:31:46,720 Speaker 1: capital back. I think they're starting to believe over the 571 00:31:46,760 --> 00:31:49,000 Speaker 1: last few years, actually, if we leave that capital with 572 00:31:49,040 --> 00:31:51,520 Speaker 1: you and a patient like you are, you'll probably find 573 00:31:51,520 --> 00:31:52,640 Speaker 1: something really good to do with it. 574 00:31:53,480 --> 00:31:57,080 Speaker 2: So let's look to the future. What excites you the 575 00:31:57,120 --> 00:31:59,600 Speaker 2: most and what keeps you in your job, I think that. 576 00:31:59,600 --> 00:32:04,239 Speaker 1: Excites the most is actually this idea of building our 577 00:32:04,280 --> 00:32:08,040 Speaker 1: own into generational business. So just like the things we 578 00:32:08,080 --> 00:32:12,640 Speaker 1: invest in go for multiple decades, having a Morrison that 579 00:32:12,800 --> 00:32:17,080 Speaker 1: goes kind of in perpetuity, and when you look around 580 00:32:17,080 --> 00:32:23,400 Speaker 1: the world, because we're the longest standing specialist infrastructure manager 581 00:32:23,400 --> 00:32:28,480 Speaker 1: in the world. We've actually been the third CEO. We've 582 00:32:28,520 --> 00:32:32,160 Speaker 1: been through multiple market cycles. You've seen kind of generational 583 00:32:32,240 --> 00:32:35,840 Speaker 1: change that's really rare. Like most of our peers are 584 00:32:36,120 --> 00:32:39,960 Speaker 1: ten to twenty years old, the original founders probably still 585 00:32:40,000 --> 00:32:41,880 Speaker 1: own most of the business and they're looking for a 586 00:32:41,880 --> 00:32:46,560 Speaker 1: way to sell it and retire, so their horizons us 587 00:32:46,600 --> 00:32:49,880 Speaker 1: to shrink. Whereas for us, we've got this wonderful structure 588 00:32:49,960 --> 00:32:53,360 Speaker 1: where almost all of our team are shareholders and when 589 00:32:53,400 --> 00:32:56,800 Speaker 1: we retire, we sell the shares back to the next generation, 590 00:32:56,880 --> 00:32:59,240 Speaker 1: and along the way we keep kind of increasing the 591 00:32:59,280 --> 00:33:01,720 Speaker 1: ownership of the next generation. And then we've got the 592 00:33:01,760 --> 00:33:04,640 Speaker 1: foundation that Lloyd said up before he died as a 593 00:33:04,680 --> 00:33:09,080 Speaker 1: Cornerstone shareholder there in perpetuity and means you really can 594 00:33:09,240 --> 00:33:12,600 Speaker 1: think on the same horizon that our clients think about you. 595 00:33:12,840 --> 00:33:15,120 Speaker 1: So that's actually what exciting when you look around and 596 00:33:15,160 --> 00:33:19,200 Speaker 1: go there's all these fullness business who are way smarter 597 00:33:20,320 --> 00:33:22,880 Speaker 1: than I am, way more equipped than I was at 598 00:33:22,920 --> 00:33:28,280 Speaker 1: their age to think about investing, and one day they're 599 00:33:28,280 --> 00:33:30,160 Speaker 1: going to be running this business and it's going to 600 00:33:30,200 --> 00:33:33,000 Speaker 1: be way bigger, way better than it is today. 601 00:33:33,200 --> 00:33:36,080 Speaker 2: It's one thing you'd like to your shareholders to know, I. 602 00:33:36,000 --> 00:33:41,080 Speaker 1: Reckon the thing that would surprise people most who kind 603 00:33:41,120 --> 00:33:44,040 Speaker 1: of look at and film Morrison from the outside. Like, 604 00:33:44,200 --> 00:33:48,840 Speaker 1: I think people expect us to be this group of 605 00:33:49,000 --> 00:33:54,800 Speaker 1: really kind of financially driven, almost like investment bankers, and 606 00:33:54,800 --> 00:33:57,560 Speaker 1: I think they'd be really surprised if they walked into 607 00:33:57,600 --> 00:34:03,720 Speaker 1: the office and there's this very kind of curious, inquiring, 608 00:34:04,200 --> 00:34:10,800 Speaker 1: collaborative group of people trying to problem solve and always 609 00:34:10,880 --> 00:34:13,640 Speaker 1: kind of thinking about the long term and then trusting 610 00:34:13,719 --> 00:34:16,280 Speaker 1: that the financial outcomes kind of fall out the bottom 611 00:34:16,320 --> 00:34:20,480 Speaker 1: of that rather than being the thing you're targeting. I think, like, 612 00:34:20,560 --> 00:34:22,839 Speaker 1: certainly that was the thing that surprised me most when 613 00:34:22,840 --> 00:34:24,480 Speaker 1: I turned up, and I think there were only seventeen 614 00:34:24,480 --> 00:34:27,400 Speaker 1: other people when I turned up at Morrison that it 615 00:34:27,440 --> 00:34:32,960 Speaker 1: was this kind of quirky, esoteric, kind of truth seeking, 616 00:34:33,080 --> 00:34:36,840 Speaker 1: curious bunch of people. See, that's probably the thing I'd 617 00:34:36,880 --> 00:34:39,640 Speaker 1: most like if people understood, because I think it's the 618 00:34:39,680 --> 00:34:40,759 Speaker 1: coolest thing about working here. 619 00:34:40,880 --> 00:34:42,920 Speaker 2: Do you have a favorite quote or piece of advice 620 00:34:43,000 --> 00:34:43,480 Speaker 2: that you like. 621 00:34:43,840 --> 00:34:47,840 Speaker 1: I'll tell you the thing that Lloyd Morrison said to 622 00:34:47,920 --> 00:34:52,360 Speaker 1: me that always somethink Lloyd had a lot of good voudisms. 623 00:34:52,520 --> 00:34:58,600 Speaker 1: But when I was talking about moving to Australia and 624 00:34:58,640 --> 00:35:00,919 Speaker 1: that we should set up a business here and back 625 00:35:00,960 --> 00:35:03,040 Speaker 1: in I guess two thousand and eight, two thousand and 626 00:35:03,120 --> 00:35:06,040 Speaker 1: nine this market was dominated by people like Babcock and 627 00:35:06,040 --> 00:35:08,319 Speaker 1: Brown who had got themselves into trouble kind of being 628 00:35:08,320 --> 00:35:11,440 Speaker 1: too short term and not thinking about their clans. And 629 00:35:11,520 --> 00:35:13,319 Speaker 1: I kind of said, I can see an opportunity there, 630 00:35:13,760 --> 00:35:15,440 Speaker 1: but I can see all the reasons why this be 631 00:35:15,480 --> 00:35:20,440 Speaker 1: really hard. And Lloyd said to me, the day you 632 00:35:20,480 --> 00:35:22,960 Speaker 1: decide to run a marathon, you can't run a marathon. 633 00:35:23,520 --> 00:35:25,319 Speaker 1: What matters is that you decide to do it, and 634 00:35:25,360 --> 00:35:27,319 Speaker 1: through deciding to do it, you commit and thenk you 635 00:35:27,360 --> 00:35:29,160 Speaker 1: do all the things that make it possible. So don't 636 00:35:29,200 --> 00:35:30,560 Speaker 1: be put off by the fact that you're not capable 637 00:35:30,600 --> 00:35:33,319 Speaker 1: of doing something. Now, just make the decision and then 638 00:35:33,320 --> 00:35:37,240 Speaker 1: you'll do it. So, yeah, that was the thing I remembered, 639 00:35:37,520 --> 00:35:39,080 Speaker 1: The day you decide to run a marathon. You can't 640 00:35:39,320 --> 00:35:41,040 Speaker 1: run a marathon, but you'll never run a marathon until 641 00:35:41,040 --> 00:35:41,759 Speaker 1: you decide to do it. 642 00:35:42,120 --> 00:35:44,680 Speaker 2: Well, I love that. I'm going to write that one down. 643 00:35:45,600 --> 00:35:47,960 Speaker 2: And I think now that we've had the chat, I 644 00:35:47,960 --> 00:35:51,600 Speaker 2: can definitely think I think philosophy and economics need a 645 00:35:51,600 --> 00:35:54,320 Speaker 2: rebrand because I think there is definitely more in common 646 00:35:54,440 --> 00:35:59,560 Speaker 2: with those ideas than we think. Definitely, definitely they are 647 00:35:59,640 --> 00:36:02,160 Speaker 2: way more connected then I think where we started at 648 00:36:02,160 --> 00:36:03,520 Speaker 2: this time of it exactly. 649 00:36:03,719 --> 00:36:07,600 Speaker 1: I think, like all philosophy really is is the study 650 00:36:07,600 --> 00:36:09,840 Speaker 1: of things we don't you'd have a proper methodology for, 651 00:36:10,560 --> 00:36:13,560 Speaker 1: so it is really esoteric, esoteric great things, which is 652 00:36:13,680 --> 00:36:15,839 Speaker 1: kind of what we do when we're investing. Like once 653 00:36:15,840 --> 00:36:18,719 Speaker 1: you've got a formula for it, it stopped being the 654 00:36:18,760 --> 00:36:21,319 Speaker 1: source of alpha. So yeah, we kind of just do 655 00:36:21,360 --> 00:36:22,319 Speaker 1: philosophy every day. 656 00:36:22,680 --> 00:36:26,000 Speaker 2: Yeah. Hey, well thanks heaps. I've really enjoyed the chat, 657 00:36:26,000 --> 00:36:29,680 Speaker 2: and I'm sure everyone else will too. I appreciate your time. 658 00:36:29,840 --> 00:37:01,759 Speaker 1: Thank you very much for being part