How Michael Dorrell Became A Billionaire Making Private Infrastructure A Safe Haven

Forbes

08-04-2025

In 2001, Michael Dorrell volunteered to move from the Sydney headquarters of Australian investment bank Macquarie to a backwater in its infrastructure investing specialty: the United States of America. 'For many years, Macquarie didn't take the U.S. all that seriously. That's why a 25-year-old kid could be sent over here and be one of six people looking at this whole market,' explains Dorrell, now 51. 'We had the market to ourselves.'
The U.S., with its now $4 trillion tax exempt municipal bond market, is still a comparative laggard when it comes to private financing of infrastructure. But between a growing list of profitable niches (think private plane airports and data centers serving the artificial intelligence boom) and growing demand for low-risk alternative investments, it has turned into a bonanza for Dorrell. In 2011, he cofounded New York City-based infrastructure investment firm Stonepeak, and still runs it as CEO. Today, it manages $72 billion in an infrastructure portfolio including wind farms, broadband service and fiber providers, marine shipping equipment, and builders of data centers–with around 55% of those assets in the U.S.
Aleksandr Karnyukhin for Forbes
Forbes estimates Dorrell is now worth $8.5 billion, with most of that his controlling stake in Stonepeak. In 2023, private capital heavyweight Blue Owl Capital spent $2 billion for a minority stake in Stonepeak in a deal that valued the firm at $15 billion, according to a source. It was the largest investment Blue Owl has made for a stake among the dozens of private investment firms it has partnered with.
'There are a million mid-market buyout firms and around 200 large-cap buyout firms. In infrastructure, there are six to 10 major players, so it's a much smaller pool,' says Blue Owl co-president Michael Rees. 'Infrastructure is an area where there's a benefit to scale, and returns are actually more attractive at the larger end of the market. You can solve more problems, and the deals tend to be bigger.'
Now Stonepeak is raising another infrastructure fund, aiming for a $15 billion fund size and a 12% net annual internal rate of return over the fund's 12-year life, according to a presentation released by Rhode Island's state worker pension fund last year. That's not unrealistic–the presentation showed that Stonepeak's average net IRR across its four flagship funds is 12.4%. Even more impressive: It hasn't realized a single loss on 46 investments to date.
That downside protection is crucial to the pension funds and insurance companies among its limited partners. Dorrell portrays infrastructure as a blend of private credit and equity, with some assets behaving like long-term bonds, while others have more variable cash flows. While U.S. public markets sink into correction territory and typical buyout funds slump, institutional investors are seeking more stability in private credit and infrastructure.
'If you're doing a private equity deal, your base case might be a 25% return, but your downside case may be you only get 30 cents on the dollar back,' says Dorrell. 'For us in the downside cases, we get 100 cents on the dollar back, maybe even more than 100 cents on the dollar, but our base case might be a 15 (% return), not a 25.'
Goldman Sachs projects private infrastructure assets under management worldwide will triple to $3 trillion by 2035, and the Trump Administration's move to cut back on government infrastructure funding could boost interest in privatization in the U.S. There's even a chance that a Congress looking for revenue sources to offset the cost of Trump's tax cuts could limit the tax exempt benefits of bonds.
That municipal bond market is crucial. In Australia, a severe recession in the early 1990s prompted states to start selling off assets like toll roads and airports. But in the U.S., governmental authorities, like the Port Authority of New York and New Jersey, are able to sell tax-exempt bonds secured by future revenues—so even when New York City teetered on the edge of bankruptcy in the 1970s, LaGuardia and JFK Airport weren't sold off.
That's why when Dorrell arrived in the U.S., the area was mostly ignored by Wall Street. Still, Dorrell's team did identify some attractive U.S. assets, buying up private airport terminals, energy suppliers and electric grids not owned by municipalities. Later, in the mid-2000s, major U.S. investment banks like Goldman Sachs and Morgan Stanley launched similar divisions.
Dorrell joined Macquarie's mergers and acquisitions group in 1998 straight out of the University of New South Wales, but noticed much of his desk's transaction flow came from advising Macquarie's own funds buying infrastructure assets. After three years of that, with an itch to go abroad, he raised his hand to move to New York.
One of Macquarie's early U.S. deals was its $238 million acquisition in 2004 of Atlantic Aviation, which owns fixed-based operator (FBO) terminals, or airport terminals for private jets. If big, international airports weren't for sale, this was the next-best thing, and it was underappreciated—Dorrell says they bought it for six times cash flow, while today similar assets would go for 15 to 20 times cash flow. He was instrumental in rolling up a slew of FBOs and adding runways and upgrading the terminals. Today, Atlantic Aviation operates more than 100 such terminals.
'You charge landing fees and service fees, and if demand keeps rising, your business is going to get better,' says Murray Bleach, the former CEO of Macquarie North America and Dorrell's boss at the time. 'That's a traditional infrastructure business—you can predict the income flows for a long time.'
Macquarie sold Atlantic Aviation to KKR in 2021 for $4.5 billion, nearly 20 times its purchase price. By then, Dorrell had long since moved on. After a decade at Macquarie, he and colleague Trent Vichie wanted to start their own fund, and after a lunch with Blackstone Group CEO Stephen Schwarzman decided to partner with the private equity giant.
That was in October 2008. Rotten timing. Blackstone's stock fell by more than 50% before the end of that year—bad news for Dorrell, who received $3 million in stock on his start date to cover the portion of his Macquarie bonus he had to return. His two and a half years at Blackstone were an unsuccessful slog through the crisis, and in 2011, Blackstone let him and Vichie spin out the business and start over. About that time, Dorrell was biking up Mont Ventoux in the French Alps, where the top of the mountain has been deforested and looks like a moonscape. He hit on Stonepeak as a fitting name.
One of its first deals was a $175 million equity investment to support the construction of San Diego's Carlsbad Desalination Plant, sourced through Dorrell's longtime relationship with Poseidon Resources, the project's developer. A 30-year water purchase agreement with the San Diego County Water Authority to provide around 10% of the county's drinking water ensured a baseline of attractive returns. The plant was up and running in 2015.
'They bought their water from the Metropolitan Water Association in the north and also the Colorado River, which often ran dry… it's a win-win, because they've solved their challenge,' says Luke Taylor, who was promoted to co-president of Stonepeak along with Jack Howell last year. (Vichie left Stonepeak in 2020 and founded EverWind, a green energy development business in Canada.) In 2019, Stonepeak sold its interest in the Carlsbad project to Aberdeen Standard Investments, generating an annualized return more than double its target 12% return.
Stonepeak was also early into 'digital infrastructure,' buying a majority stake in Cologix in 2017 with co-investors for $1.2 billion. In 2022, it raised another $3 billion from both new and existing investors to recapitalize the business and buy out some earlier investors. Based in Denver, Cologix is the largest private carrier 'hotel' business in the U.S.—carrier hotels serve as hubs for interconnection, for example connecting your home broadband provider to a data center owned by Amazon.
Now, artificial intelligence firms are hungry for hyperscale data centers, which have the ability to scale up as demand increases. It's a field Stonepeak is entering selectively, and only when it has long-term contracts in hand to ensure a return on investment, Howell explains. Cologix has formed a hyperscale division called Scalelogix which has seven current or planned data centers in locations like Ashburn, Virginia, and Columbus, Ohio.
'There are two ways to get into hyperscales if you're not already in that game. One way is you go and buy a big existing hyperscale platform… The negative of doing it that way is that you're paying a very big premium,' says Dorrell. 'The other way to do it, which we prefer, is to build your own data centers from scratch. It's probably going to take you five years to get that flywheel going, but the benefit of that is you got into it so much more cheaply.'
The U.S. market looks a lot different than when Dorrell got here more than two decades ago. American investors, who once dismissed infrastructure as government work, now can't get enough of it. Private equity giants KKR, Brookfield and EQT have all raised infrastructure funds, while Blackrock bought Global Infrastructure Partners for $12.5 billion last year.
'There's no shortage of opportunity. There's also no shortage of capital chasing those opportunities,' says Dorrell.