I Squared’s Mohamed El Gazzar, Maxime Jacqz, Kristen Guo at Arriva - the wheels on the infrastructure bus “go ‘round and ‘round”
Welcome back to the Alt Goes Mainstream podcast.
Many of you have probably seen the red buses traversing the streets of London. Some of you have probably taken a London red bus to get to your next stop in the city.
We went to North London to Arriva’s Palmers Green bus depot to take an inside look at the business of Arriva.
Arriva London is one of the largest bus operators in London. They’ve been carrying passengers around the UK’s capital since 1980 and they currently provide around 18% of the capital’s bus services, transporting 300 million passengers a year and covering 50 million miles across the 100 routes they operate under contract to Transport for London.
Arriva London is part of the broader Arriva Group, which operates in 11 countries across Europe. The Group operates almost 12,000 buses and 650 trains, completing 1.5 billion passenger journeys a year.
We had the chance to sit down with the team at I Squared behind Arriva and I Squared’s infrastructure investing platform that delivers essential, everyday services to people across the globe.
We talked with I Squared Senior Partner Mohamed El Gazzar, Fund Partner Maxime Jacqz, and Principal Kristen Guo about how they have built Arriva into a pan-European transportation platform.
Chapter 1 - Mohamed El Gazzar: Patience, price discipline in their infrastructure investments, and professionalizing the Arriva platform.
Notable quotes from Mohamed:
“We’re very disciplined when it comes to our entry price. The deal doesn’t work, but we like a sub-sector. We continue to track that sub-sector.”
“Data centers need more power. The transportation sector is going to continue to electrify. The housing sector will continue to electrify. As a colleague of mine says, it’s yes or yes.”
“A lot of people buy certain businesses and say, ‘Oh, my exit route’s an IPO.’ But if the market’s closed, what do you do? We’ve been there before.”
00:00 Inside London Bus Depot
01:03 Infrastructure Investing Goes Mainstream
01:37 Sponsor Message Ultimus
02:35 Meet Mohamed El Gazzar
04:42 Europe Infrastructure Evolution
07:58 How Concessions Work
09:52 Why Buy Arriva
15:00 Carve Outs and P2P Deals
17:23 Value Creation and CapEx Plan
21:34 Electrifying Fleets and Power
26:51 Risks Regulation and Geopolitics
29:27 Diversification Mid-Market Exits
33:46 Democratizing Infrastructure Access
Chapter 2 - Maxime Jacqz: Value creation with Arriva
Notable quotes from Maxime:
“We hate the concept of having an asset which has unlimited downside and zero upside.”
“There is a single factor which is doing everything, which is talent. Without talent, you have nothing. The next buyer is not going to buy us. They’re going to buy the team.”
“Can we create an amazing value creation story with it? Yes. Could we also create a monster? Absolutely. And we don’t want that.”
00:00 Welcome Aboard Arriva
00:30 Maxime’s Path to I Squared
02:16 Investment Lessons on Risk
04:10 Electrifying the Bus Fleet
07:42 Platform Strategy and Synergies
10:24 Mid-Market Consolidation Playbook
12:58 Talent as the Value Driver
14:51 Picking and Backing Leaders
17:04 Operators vs Bankers Balance
Chapter 3 - Kristen Guo: How capital markets can be a growth engine for infrastructure companies
Notable quotes from Kristen Guo:
“We’re very boring with our leverage profile. We always only take senior debt.”
“The debt should be a facilitator, but it should not drive the fundamental business decisions.”
“The amount of knowledge you learn by talking to someone on site, running that site, is way more than what you can read from a board deck.”
00:00 Welcome Aboard Arriva
00:30 Kristen’s Career Path
01:12 Capital Markets Fuel Growth
02:50 Financing Arriva Cash Flows
04:43 Building Lender Trust
05:48 Private Credit and Leverage
07:32 Platform Synergies in Action
09:08 Asset Management Conference
Bios
Mohamed El Gazzar is a Senior Partner of I Squared Capital, responsible for the infrastructure strategy in Europe. Mohamed is part of ISQ’s Executive Committee, Investment Committee, and Operating Committee, where he leads the Human Resources subcommittee. He sits on numerous boards and DATs, including but not limited to Conrad Energy, Lighten, Cube Cold Europe and Aggreko. Since joining I Squared Capital, Mohamed has led the acquisition and development of portfolio companies encompassing power and utilities, energy, transport and logistics, digital infrastructure, environmental infrastructure and social infrastructure. Some of the power and utilities investments that Mohamed has led include Energia Group in Northern Ireland and the Republic of Ireland; T-Solar, a solar PV portfolio with operations predominantly in Spain which was sold in 2020; and Conrad Energy, a UK independent power producer providing highly flexible generation; Aggreko, a leading global provider of mobile modular power, temperature control and energy services. In the transport and logistics space he led the 2018 acquisition of TIP Group, the largest pan-European trailer and truck lessor with presence across 17 countries in Europe and Canada; Cube Cold Europe, a pan-European cold storage platform focusing on acquiring and developing small- to medium-sized cold storage facilities across strategic areas such as ports and logistics hubs; and Arriva, a bus and rail operator. In 2019, Mohamed was involved in the acquisition of Domidep, I Squared Capital’s first investment in the social infrastructure space and one of the largest elderly residential care providers in France. In the digital infrastructure space, Mohamed led the acquisition of EXA, a leading pure-play operator of critical telecom infrastructure networks, which was completed in 2021. More recently, Mohamed led the acquisition of Applus, a global leader in the testing, inspection, and certification (TIC)sector. Before joining I Squared Capital, Mohamed spent 12 years at Morgan Stanley, most recently as an Executive Director of Morgan Stanley Infrastructure (MSI), a global platform for infrastructure investments at Morgan Stanley Investment Management. Mohamed holds an LL.B. with Honors from Warwick University in the United Kingdom.
Maxime Jacqz is a Fund Partner based in the London office, leading ISQ’s European asset management function. Maxime focuses on portfolio company management and asset optimization, as well as due diligence and transaction execution. He serves on the boards and DATs of I Squared Capital portfolio companies including, but not limited to, EXA, Enva, Aggreko, Applus, Cube Green Energy, Cube Cold and nLighten. Maxime’s asset management experience includes setting up 100-day plans, appointing and incentivizing asset management teams, leading operational changes, chairing boards, executive committees and remuneration committees, managing refinancing processes, add-on investments and executing exit strategies. Prior to joining I Squared Capital, Maxime gained over 13 years of infrastructure experience, notably within EISER Infrastructure Partners (previously known as the ABN AMRO Global Infrastructure Fund), where he was a Director focusing on the infrastructure sub-sectors of transportation, energy (including renewable energy), and environmental services. Maxime started his career in the M&A team of ABN AMRO in 2004, where he advised numerous corporates in their acquisition strategies. Maxime holds a Master of Science from ESCP Europe in Paris and a German Diplom Kaufman.
Kristen Guo is a Principal in the Asset Management department based in the London office. Kristen drives value creation across ISquared Capital’s European infrastructure portfolio and leads capital markets, as well as exit strategy and execution. Over the past year, Kristen played a central role in financing transactions totaling more than €10 billion. She also participated in the sale of T-Solar, Energia and TIP Group. Prior to joining I Squared Capital, Kristen was at Kroll and NERA Economic Consulting. Kristen holds an MSc in Finance and Economics from the London School of Economics and a BA in Economics from Peking University.
Thanks Mohamed, Maxime, and Kristen for sharing your wisdom, expertise, and passion about infrastructure and for all the work you and your peers do to help keep the buses, trains, and planes running on time, literally and figuratively.
Show Notes
00:00 Inside Arriva Depot
Show Notes
00:00 Inside Arriva Depot
01:37 A Message from Our Sponsor, Ultimus Fund Solutions
02:35 Meet Mohamed El Gazzar
04:42 Europe Infra Evolution
07:58 Concessions Explained
09:48 Why Buy Arriva
10:15 Deal Sourcing Journey
13:05 Arriva Competitive Moats
15:00 Carve Outs and P2P
17:23 Capex and Equity Story
21:34 Electrification Power Needs
26:51 Risks Regulation Geopolitics
29:27 Diversification Mid-Market Edge
31:00 Exit Routes Highway Metaphor
33:48 Democratizing Infrastructure
35:55 Meet Maxime Jacqz
36:33 Maxime’s Career Path
38:12 Risk First Value Creation
40:06 Electrifying The Fleet
43:52 Complex Mid-Market Strategy
46:37 Cold Storage Consolidation
49:11 Talent Drives Value
51:07 Dual Leadership Model
53:00 Balancing Operators And Bankers
54:41 Growth Versus Exit Discipline
56:32 Meet Kristen Guo
57:45 Debt Powers Growth
59:23 Financing Contracted Cashflows
01:01:29 Lender Trust And Leverage
01:02:21 Conservative Leverage
01:04:05 Platform Synergies
01:07:45 Closing Thoughts
A Word from Our Sponsor, Ultimus
This episode of Alt Goes Mainstream is brought to you by Ultimus, the full-service fund administrator and transfer agent powering asset managers in private and public markets. As alts go mainstream, you need real expertise to handle complex fund structures, connect with key distribution partners, and handle sophisticated compliance, reporting, and transparency demands.
That’s Ultimus: high-tech, high-touch solutions for over 450 clients and 2,500 funds with $775B in assets under administration. Backed by an expert team of over 1,200 employees, they place client service at the core of their business, helping you navigate complexity during your fund structuring or launch and then supporting you through every stage of growth. Whether you’re already in the market or thinking about entering private wealth, you can trust their team’s deep expertise in retail alternatives to help you reach your goals.
We thank Ultimus for their support of alts going mainstream.