The South African calmly apologises for forgetting his tie today, but despite the laidback approach, the 44-year-old global head is straight-talking when it comes to his views on the partnerships world. It is an area he knows well from both sides, having been seconded to the Treasury for a two-year stint as head of its PPP policy team in 2004.
A believer in the building of bridges between the public and private sectors, Abadie was in Westminster again earlier this year, acting as a witness to the government select committee’s hearing into the future of PFI. The outcome was not what he had hoped either side would gain from the experience.
“I’ve been on holiday. When I came back, the report from the hearing was on my desk, in its fine green binding,” he says, already sounding a little downtrodden. “As a witness, I assumed it would reflect what I heard at the hearings and read in the submissions. But it felt like the things we talked about were not reported.
“Almost like there was a prejudice that they wrote up beforehand,” he continues, mischievously, “and then tried to corroborate it through what the witnesses spoke about. Private finance has driven significant infrastructure delivery across the UK for over 15 years and now is a political pariah.
“Some really stupid and ill-informed criticisms are made of private finance so let’s hope it is there when government next calls for it. Lenders and investors are tired of the criticisms and won’t forget it.”
Along with the rest of the private sector, Abadie, who has worked for PwC in the UK for the last 10 years, has watched the government tear chunks out of the potential for private finance in infrastructure in recent months. With MPs pushing for a suspension of PFI procurements in September, it begs the question, what was the point in the hearings?
Even Abadie seems unsure. “Whilst sat on the committee I felt I answered the questions I could. But I don’t necessarily feel that the evidence was read, nor do I feel that all the answers were listened to.
“I think the hearing followed due process but…if [the government] has no future investment to offer, there is no point. Horses and stable doors come to mind.”
And it may not be the MPs alone adding fuel to the anti-PFI fire. Abadie, playing devil’s advocate, suggests that other public sector bodies such as the National Audit Office (NAO) are driving the agenda.
“It is incumbent upon the NAO to protect the taxpayer from government spending decisions as a mandated role. But I struggle a little with what exactly their role is surrounding PFI.
“I feel their focus has strayed well beyond ensuring that government is getting best value for what they spend, into subjective opinion pieces, [and] I think that is what is driving some of these hearings. Maybe it is time for them to get back to their core mandate.”
Taking a break
Following his appearance on the panel, Abadie took a much-needed break. He relaxes back in his chair as he reminisces over the sunnier climates of Marquette on Lake Superior and St Pete’s Beach in Florida, where he spent three weeks simply doing as little as possible.
“When I go away, I enjoy being somewhere in nature, with peace and quiet. Where you can see stars at night and hear birds singing during the day. I want to sit quietly and just watch the world go by rather than running around doing stuff.”
A stark comparison to his busy and rushed lifestyle in London, where he leads PwC’s global capital projects and infrastructure team. “With the global responsibilities comes a lot of dealing with our offices around the world.” As a result, he says he’s currently spending over 50% of his time away from the UK office.
That so much of his time is spent elsewhere is indicative of the UK’s slowing market – and the growing clamour for PPP expertise elsewhere. From this viewpoint, it is no surprise Abadie is increasingly frustrated with the anti-PFI rhetoric in this country.
But he never envisaged his career to lead to such a broad spectrum of responsibility. In fact for a long time, and through several unanticipated propositions, he admits he often questioned how he ended up here.
Although sporting a proud South African accent, he is originally from Switzerland. Born to a French father and a South African mother, his family lived in Europe for five years, before emigrating back to his mother’s homeland.
“I was educated in South Africa and was the first of my family to go to university. I didn’t do a lot of thinking about the future. At school I was just focused on sports and passing exams, in that order.
“After graduating from school, I stumbled into an accounting degree and after an extended period qualifying and working as an accountant, I was given the opportunity to join the South African construction company, Group Five. I knew nothing about project finance, but they offered me a role in the field.”
Having spent three years working on their corporate and project finance deals, Abadie had built up a strong experience in the emerging partnerships world. “It was at a time when the construction industry in South Africa was really developing. I was working on toll road, water and property deals over that period.
“Then we did an acquisition with international toll road operator Intertoll,” Abadie smiles, “and I was invited onto their board of directors.” Working for Intertoll sent Abadie travelling all over the world. But it wasn’t long before he was snapped up again, this time by PwC, heading up its South African infrastructure finance team.
“I ran it for two and a half years, working on water, road, rail, prison, leisure and mining infrastructure deals – anything I could get my hands on. Then – and again, quite unexpectedly – I was asked to move to the UK to become a partner in the transport infrastructure team, and I have been here ever since.
“Ten long years,” he reflects, wryly.
In 2004, he was scouted again. This time by the Treasury, which offered him the chance to lead its PPP policy team. “Given the little experience I had in the UK PFI market, I remember thinking why the hell do they want me to do it? I still don’t know the answer.”
He reflects on what he describes as a “very interesting two and a half years” at Treasury, during what was the government’s peak investment period in infrastructure.
“It was towards the end of 2007 that we started feeling the first chill winds of the global financial crisis, before the massive meltdown of Lehman’s.”
When Lehman Brothers collapsed, the whole world was quickly plunged into financial crisis, and the free spending days were over. “While we were spending a lot of money on infrastructure,” he admits, “the government was just spending a lot of money generally – a lot funded by unsustainable borrowings.”
Abadie returned to PwC to resume the role of heading the company’s global infrastructure finance and PPP business. It wasn’t long before he picked up the day to day management of the UK business too and became embroiled in the long slog ahead.
“The market is going through some difficult times still. I think that members of the public sector have got into the mindset that private money is bad. That has a ripple effect across the economy; it has a ripple effect across investor appetite and it is afecting sentiment in the market.”
What frustrates him the most, it seems, is that he firmly believes the private sector wants to support government. “We’re a global business. If we were to help ourselves, we would take our people and resources elsewhere and go and focus on clients who are committed to infrastructure development.
“The reality is that we, the banks, and developers can help. But it’s going to need some real dynamic leadership from the government to make a difference.”
Government talk of levies on projects, higher windfall taxes and the like all mean the levels of risk perceived in the UK market are higher than in the past, says Abadie. “For the first time, I am starting to hear investors talk about the UK government as demonstrating signs of political risk.”
Nonetheless, he remains confident that there is still hope, which could come from the forthcoming National Infrastructure Plan (NIP), due at the end of November. It’s a document Abadie describes as a “good thing”, albeit flawed.
“We have a government that is halfway through its elected period. As they get closer to the next election, they’re going to have to start focusing on plans to deliver infrastructure and public services rather than the somewhat hysterical criticism of anyone that seems to be making money. We have exceptional sectors in the UK, where you can see a lot of appetite: renewables, rolling stock and waste particularly.”
When the first NIP was launched last year, Abadie says he was pleased that there were some identifiable plans being laid out by government. “But I was stunned by how insignificant the government portion of the investment into infrastructure was, relative to what they presumed the private sector would be doing anyway.”
Offering a neat analogy, Abadie describes the NIP as “a little like sailing a boat in a storm with no engine: the sails are not going to help you much”. Like everything, it comes back to the money, which remains the government’s Achilles heel in these straitened times.
“It’s very difficult to criticise the government because they’ve got both hands tied behind their backs right now – they have no money.
“This is not being critical of them,” he adds.
Unsurprisingly for someone who tells things as he sees them, Abadie wants the government to offer him and the industry the same courtesy. “If they would answer us, and tell us that they are broke, that they cannot invest in infrastructure and that they need a couple of years, people would respect them for that.
“They’re in an environment where they hide behind the NIP and use it to spin a story about how committed they are, then on the flip side, they become highly critical of the whole supply chain that provides the infrastructure in the first place.
“I expect more from one of the 10 largest economies in the world. People and money go where the opportunities are and I would like to see them stay here.”
Abadie remains convinced that there is still hope for the UK market, and is confident that the private sector has an important role to play over the years ahead. So what does he expect to see?
“I am watching with interest, but also with trepidation,” he says, adding that the issues go way beyond infrastructure investment. “We have macro-economic problems in the UK; very low growth, very low interest rates and stubbornly high unemployment.”
And on the NIP?
“I hope this time we see the best of government, with focused investment plans driven by centralised control and funding. The last instalment was simple and realistic but hopelessly oversold.
“If it had been a financial product, investors would be clamouring for a refund.”