175. Capitalizing on the Infrastructure giants’ Blind Spots - Apr25
Apr 7, 2025
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Chris Rozzell, Managing Partner of Cresta Funds, dives into the intricacies of investing in underappreciated sub-sectors like mid-stream infrastructure. He reveals how a focused approach can capitalize on blind spots left by larger funds. The conversation spans crucial areas such as waste gas, biofuels, and sustainable aviation fuel, shedding light on the evolving landscape shaped by new U.S. policies. Rozzell also emphasizes the profitability of pursuing niche market opportunities while navigating the complexities of ESG investing.
Cresta Funds emphasizes investing in overlooked sectors like waste gas management and sustainable aviation fuel to drive decarbonization.
Chris Rozzell highlights the need for private equity to adapt its strategies, blending operational expertise with an understanding of energy infrastructure challenges.
Deep dives
The Importance of Green Molecules in Energy Transition
The discussion emphasizes the critical role of molecules in the energy system, highlighting the need to shift towards greener alternatives. This includes a focus on areas such as waste gas management, sustainable aviation fuel, and emission capture, which have historically received less attention compared to electrification efforts. Furthermore, Chris Roselle from Cresta Funds notes the cultural gap within private equity relating to energy infrastructure, advocating for a blend of operational expertise and an understanding of founders' challenges in raising capital for real asset investments. The conversation illustrates the necessity for innovative solutions in these nascent sectors to address environmental challenges while meeting growing energy demands.
Investment Strategies in Waste Gas and Biofuels
Cresta Funds identifies three main investment areas: circular economy practices focusing on waste management, various fuel alternatives, and direct emissions reduction technologies. The conversation highlights examples such as the upcycling of plastic waste and the development of sustainable aviation fuel (SAF) to ensure compatibility with increasing global demand, despite recent volatility in the market. Chris discusses the complexities of investing in biofuels, suggesting that while the current environment is turbulent, there is long-term potential as infrastructure matures and demand stabilizes. This investment approach aims to tackle overlooked sectors that are essential for transitioning to net zero while remaining economically viable.
Navigating Uncertainty in Energy Policy and Market Dynamics
The discussion acknowledges the uncertainty surrounding U.S. energy policy and its implications for investment, particularly concerning carbon capture technology and renewable energies. Chris points out that bipartisan support exists for carbon capture due to its long-standing incentives, which are not influenced by the current administration. However, he recognizes the broader challenges posed by inflation and trade friction that may affect the growth of these sectors. Texas is highlighted as a special case, showcasing its abundant resources and infrastructure, which allows for a more efficient energy landscape and indicates an economically driven growth model rather than purely ideological motives.
Capitalizing on the Infrastructure giants’ Blind Spots: How can a specialised PE fund thrive under the new US Administration?
The Energy Transition encompasses more than just power and AI. We have chosen to explore the niche yet crucial areas of waste gas, biofuels, sustainable aviation fuel (SAF), and emissions capture.
At the heart of this journey is Cresta, a $2 billion specialist fund positioned at the intersection of Private Equity and Infrastructure. Chris Rozzell, the fund's Managing Partner, shares insights on how a fund focused on industrial sectors can thrive in underappreciated sub-sectors like mid-stream infrastructure—areas often overlooked by larger, more traditional funds.
By adopting a strategy akin to a scavenger's approach, Cresta has capitalized on these opportunities. Chris also discusses the impact of the new US administration on his investment thesis and why choosing the Zag when everyone else is choosing the Zig has proven to be highly profitable.
While the Energy Transition is multifaceted, it is also fraught with blind spots. Cresta stands as a prime example of how industrial expertise can drive meaningful decarbonization efforts.
The discussion in this podcast is for informational purposes and should not be relied on as investment advice or an offer to sell or a solicitation for an offer to buy any securities. Any opinions expressed are those of the speaker and are subject to change. Listeners should not make investment decisions based solely on the information in this podcast.
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