KKR’s Global Head of Infrastructure Rj Agrawal joins Yahoo Finance Live to discuss how America’s infrastructure sizes up to our global counterparts.
MYLES UDLAND: All right, infrastructure week continues here on Yahoo Finance, rebuilding America, how we can try to push forward and finally get some infrastructure investment done after several years of this, of course, serving as a punch line. And joining us now to discuss not only what the US needs to do, but how we can make our infrastructure stack up with our global counterparts is Raj Agrawal. He is the Head of Infrastructure-- Global Head of Infrastructure-- excuse me-- over at KKR.
Raj, great to speak with you this morning. I'd love to start by, as you-- you know, you have a global view on infrastructure investment and the way that your team is looking at opportunities. Here we're focused on what the US needs to do, what the US can do. And given that purview, what are the most glaring issues that you see in American infrastructure? And how have you guys thought maybe about trying to deploy some capital or conversations you've had with folks about how to best go about fixing those key issues?
RAJ AGRAWAL: Sure. I think it's really important to think about it in two pieces. The first piece is playing defense. It's often quoted the American Society of Civil Engineers has given our country's infrastructure a D. And I've got three kids. And if one of them came home with a D on the report card, we would do something about it.
So as a country, it's time for us to do something about it, whether it's bridges that are crumbling, or toll roads, or roads that are crumbling with potholes, or we are seeing power issues, water line issues in Texas. We saw issues-- I'm in northern California right now-- with power and fires. And it's clear that we have decaying infrastructure, and it's time to invest to-- to rebuild that.
But it's also important to note that infrastructure is very much an offensive game as well. It is a very pro-growth item to invest in infrastructure. The ROI is tremendous. And we can't forget about the offensive side either.
BRIAN SOZZI: Raj, as someone who has spent so much time in infrastructure space, what goes through your mind when you see the images and what's happening in Texas right now? And then how could Texas, to your point, how could they go on the offense?
RAJ AGRAWAL: Yeah, look, it's-- it's incredibly sad. There's a lot of folks that, frankly, still are in harm's way in Texas. So it's-- you know, that's the first thing that goes through my mind is how-- how to get help to these folks. How do we help them out and just get out of the crisis that's at hand?
And I don't know-- I'm reading the stories, as you are, I don't know exactly what has gone wrong. I think there's probably a number of things that have gone wrong. So I almost put this part of-- I put what Texas needs to do and what, frankly, many states around the country need to do with respect to this is-- is defense.
When I think about offense, I think about investment in telecom infrastructure, as an example. It's-- it's data centers, frankly, that host Yahoo Finance. It's telecom towers to put-- to accelerate the rollout of 5G wireless. It's fiber to the home, especially in rural areas, so there's equal and fast internet access to help education, to help jobs, to help the economic growth, or it's investment in energy transition.
Growth, economic growth consumes a lot of power, and we need to do that in a sustainable way. And we've been one of the largest investors in renewable energy globally. And so when I think about investing for growth and going on offense, those are some of the things I think about.
JULIE HYMAN: Raj, again, as Myles mentioned, your purview is global. And I'm always fascinated by the differences between how we do infrastructure here in the US versus Europe, for example, where you've got privatized toll roads is just one example. What lessons can we learn from the way that those partnerships are structured around the world and the play between private and public here in the United States?
RAJ AGRAWAL: Yeah, absolutely. So the issue with decaying infrastructure is not unique to the US, right. They have this issue in most developed economies around the world. What-- to your point, what Europe has that we don't is a lot of comfort, a lot of experience with private capital investing in critical infrastructure, so brand spanking new airports with tremendous retail offering, places where you want to go an hour early because it's such an attractive place to be, not to mention incredibly efficient, or toll roads where you can't find a pothole, it's completely smooth, efficient, never traffic on a-- managed lanes, getting from the airport to city center in 10 minutes by train. I so often think about that when I'm trying to get from Manhattan to JFK.
So there's a tremendous benefit from-- from private investment and infrastructure that, frankly, there hasn't been so much experience with that in the US. I think the moment for infrastructure is now. I think there's an openness for the economic stimulus that comes with infrastructure investment. That comes at the same time when cities, states, the federal government need capital more than ever.
So I think the moment is now. But it's been a chicken and egg problem historically in the US. There hasn't been that experience to know what infrastructure investment, private Infrastructure investment can do. And so there hasn't been the demand for it. But I think that's about to change.
MYLES UDLAND: Yeah, Raj, it's a very American thing to see United's whole ad thing is, like, actually, just fly out of Newark instead of JFK, it's faster to get to Manhattan. Quickly before I let you go, I just want to ask about conversations you're having with clients right now around deploying capital domestically. I know you guys just raised an Asia-Pacific fund.
But you mentioned the time to act here in the US is now. What have those conversations been like? And how eager do you think investors are to try and put some money to work with respect to US infrastructure projects?
RAJ AGRAWAL: Certainly. We've deployed about $25 billion of capital in the last decade, equity capital to invest in infrastructure. The vast majority of that has been in North America and Europe. Asia's a growth business for us. Globally, there's huge interest to invest in infrastructure today. We're at a time when the volatility of equity markets is tremendous, where it's difficult to find yield.
People are worried about protecting their capital. They're worried about long-term inflation. So if you can deliver real assets that have built in inflation protection, they're critical assets, so even if there's economic volatility, it's essential infrastructure that folks are still using and still paying for. That-- that ability to provide steady, predictable returns, low volatility, collecting a coupon in this economic environment is as attractive as it's ever been.
MYLES UDLAND: All right, Raj Agrawal is the Global Head of Infrastructure over at KKR. Raj, great to get your thoughts this morning. Thanks for waking up early West Coast time. Appreciate the time.
RAJ AGRAWAL: Thank you for having me. I really appreciate it.