Henry McVey

Global investors are underweight infrastructure at ~3%, which should double as the AI and security industrial revolution drives massive buildout. This creates a durable allocation opportunity.

McVey argues we are in a "regime change" favoring real assets (infrastructure/real estate) and that Private Credit is undergoing massive consolidation ("went from 20 players to five"). He notes defaults will rise, making scale and recovery capabilities critical. In a consolidating market with rising defaults, the largest players with the best origination and workout teams win market share from smaller, weaker funds. Additionally, these firms are the primary aggregators of the "hard assets" (infrastructure) McVey recommends for an inflationary environment. Long the "Big 4" Alternative Asset Managers who benefit from the consolidation and demand for real assets. A severe global recession causing a liquidity crisis in private markets; regulatory crackdowns on non-bank lending.

McVey argues we are in a "regime change" favoring real assets (infrastructure/real estate) and that Private Credit is undergoing massive consolidation ("went from 20 players to five"). He notes defaults will rise, making scale and recovery capabilities critical. In a consolidating market with rising defaults, the largest players with the best origination and workout teams win market share from smaller, weaker funds. Additionally, these firms are the primary aggregators of the "hard assets" (infrastructure) McVey recommends for an inflationary environment. Long the "Big 4" Alternative Asset Managers who benefit from the consolidation and demand for real assets. A severe global recession causing a liquidity crisis in private markets; regulatory crackdowns on non-bank lending.

McVey argues we are in a "regime change" favoring real assets (infrastructure/real estate) and that Private Credit is undergoing massive consolidation ("went from 20 players to five"). He notes defaults will rise, making scale and recovery capabilities critical. In a consolidating market with rising defaults, the largest players with the best origination and workout teams win market share from smaller, weaker funds. Additionally, these firms are the primary aggregators of the "hard assets" (infrastructure) McVey recommends for an inflationary environment. Long the "Big 4" Alternative Asset Managers who benefit from the consolidation and demand for real assets. A severe global recession causing a liquidity crisis in private markets; regulatory crackdowns on non-bank lending.

Regarding AI, McVey warns against the "if you build it, they will come" speculation. Instead, he explicitly advises finding "contracted cash flow" within the Data Center/AI theme. Data Center REITs (Real Estate Investment Trusts) operate on long-term leases (contracted cash flows) with hyperscalers (Microsoft, Google, etc.). They represent the safe, rent-collecting side of the AI boom rather than the speculative hardware side. Long Data Center REITs as the "contracted cash flow" play on AI. Overbuilding in the data center space leading to lower rental rates; higher interest rates hurting REIT valuations.

McVey just returned from India and highlights that their economy is growing "10 to 11%" on a nominal basis. He notes the government is actively moving assets off their balance sheet to raise tax revenue. High nominal growth combined with privatization is a perfect recipe for equity market appreciation. KKR is aggressively investing there, signaling institutional confidence. Long India ETFs to capture the high nominal GDP growth and infrastructure boom. Currency devaluation (Rupee vs Dollar); political volatility or regulatory changes in India.

Regarding AI, McVey warns against the "if you build it, they will come" speculation. Instead, he explicitly advises finding "contracted cash flow" within the Data Center/AI theme. Data Center REITs (Real Estate Investment Trusts) operate on long-term leases (contracted cash flows) with hyperscalers (Microsoft, Google, etc.). They represent the safe, rent-collecting side of the AI boom rather than the speculative hardware side. Long Data Center REITs as the "contracted cash flow" play on AI. Overbuilding in the data center space leading to lower rental rates; higher interest rates hurting REIT valuations.

CEOs are telling KKR their #1 focus is "Security of Everything," specifically explicitly stating: "Make sure that my power works." To ensure power reliability and redundancy for data centers and logistics, companies must upgrade electrical infrastructure. This directly benefits companies that provide power management hardware (Eaton, Vertiv) and grid engineering/construction (Quanta Services). Long Power Infrastructure & Grid Modernization plays. Supply chain constraints delaying projects; government spending cuts on infrastructure.

McVey just returned from India and highlights that their economy is growing "10 to 11%" on a nominal basis. He notes the government is actively moving assets off their balance sheet to raise tax revenue. High nominal growth combined with privatization is a perfect recipe for equity market appreciation. KKR is aggressively investing there, signaling institutional confidence. Long India ETFs to capture the high nominal GDP growth and infrastructure boom. Currency devaluation (Rupee vs Dollar); political volatility or regulatory changes in India.

McVey argues we are in a "regime change" favoring real assets (infrastructure/real estate) and that Private Credit is undergoing massive consolidation ("went from 20 players to five"). He notes defaults will rise, making scale and recovery capabilities critical. In a consolidating market with rising defaults, the largest players with the best origination and workout teams win market share from smaller, weaker funds. Additionally, these firms are the primary aggregators of the "hard assets" (infrastructure) McVey recommends for an inflationary environment. Long the "Big 4" Alternative Asset Managers who benefit from the consolidation and demand for real assets. A severe global recession causing a liquidity crisis in private markets; regulatory crackdowns on non-bank lending.

CEOs are telling KKR their #1 focus is "Security of Everything," specifically explicitly stating: "Make sure that my power works." To ensure power reliability and redundancy for data centers and logistics, companies must upgrade electrical infrastructure. This directly benefits companies that provide power management hardware (Eaton, Vertiv) and grid engineering/construction (Quanta Services). Long Power Infrastructure & Grid Modernization plays. Supply chain constraints delaying projects; government spending cuts on infrastructure.

CEOs are telling KKR their #1 focus is "Security of Everything," specifically explicitly stating: "Make sure that my power works." To ensure power reliability and redundancy for data centers and logistics, companies must upgrade electrical infrastructure. This directly benefits companies that provide power management hardware (Eaton, Vertiv) and grid engineering/construction (Quanta Services). Long Power Infrastructure & Grid Modernization plays. Supply chain constraints delaying projects; government spending cuts on infrastructure.