Bruce Richards Bullish on Technology Infrastructure Trade
Bruce Richards of CVC Marathon predicts strong returns for data center and compute infrastructure investments despite higher interest rates.
Managing partner and head of CVC Marathon Bruce Richards expressed a bullish outlook on the technology trade, specifically targeting investment-grade off-take for compute infrastructure and data centers. He argued that higher interest rates have created attractive risk-adjusted returns for investors and lenders, though he cautioned that non-investment-grade projects carry higher risk unless they are fully operational powered shells with strong counterparty credit.
Richards dismissed recession concerns by citing stable credit spreads and strong GDP growth. While he acknowledged Fitch Ratings data showing an effective default rate of 6.2% for companies struggling to service debt in the current rate environment, he maintained that technology trade is performing well. He identified a global trend toward reindustrialization, advocating for asset-based lending for hard assets with low obsolescence, including aircraft, turbines, and GPUs.
Richards also noted that the merger between CVC and Marathon, which concluded in July, is progressing as planned. He suggested that current inflation and higher rates are being driven by significant supply levels.
