Foto cedidaJorge Silva, Jessy S. Mogro, Joe Olivera y Ana Paula P. O'Keefe. THE OSM Group
Snowden Lane Partners, an independent wealth advisory firm, has announced the launch of a new advisory team based in their New York City headquarters: the Oliveira, Silva & Mogro (OSM) Group, whose members join from Wells Fargo.
This new team, the sixth one to join Snowden Lane this year, is composed by Joe Oliveira, Jorge Silva and Jessy Mogro as Partners and Managing Directors; and Ana Paula O’Keefe as Senior Registered Client Relationship Manager. They will oversee 212 million dollars in client assets.
Rob Mooney, CEO of Snowden Lane Partners, claimed to be “delighted” to welcome the group. “They care deeply about their clients and they’ve created a tight-knit team that really works well together. It’s no surprise they’ve become such a successful and high-performing group, and we look forward to watching them grow”, he added.
The team specializes in customized wealth management solutions and financial planning for their clients residing predominantly in Brazil, Mexico, Argentina, Colombia, Venezuela and Europe, as well as in the U.S. OSM tailors a customer-centric and fiduciary approach to each of their clients’ needs and financial goals, with client satisfaction and trust at the center, says their webpage.
“The universe of wealth advisors has grown dramatically over the last few years, but as we took a look at the firms out there and analyzed which platforms offered the best home for our clients, Snowden Lane really stood out,” commented Oliveira.
The team
The firm has 112 total employees, 62 of whom are financial advisors, across 12 offices around the country. Since its founding in 2011, it has attracted top industry talent from Morgan Stanley, Merrill Lynch, UBS, JP Morgan, Raymond James, and Wells Fargo, among others.
Oliveira is a 21 year veteran of the financial industry, who obtained his Series 7 and Series 66 licenses at Paine Webber/UBS. He then continued his career in finance at JP Morgan, focusing on domestic and non-resident wealth management. As an International Financial Advisor, Joe traveled extensively to Latin America and Europe and developed strong knowledge of the international markets and the specific needs of the non-resident clients. Most recently, Joe served as a Vice President, Senior Financial Advisor at Wells Fargo Advisors where he continued to develop his skills.
Silva began his career in financial services in 1994 with Pacific Life Insurance Company in California. He serviced and marketed their suite of variable annuities to financial advisors located in the southeast and Florida. He obtained the required licensing with the series 7 & 63. Over the past 27 years he has gained extensive knowledge and experience of capital markets, banking and wealth management. Silva has dedicated the last 14 years to advising individual clients, families and businesses in accumulating and managing wealth. Since 2018, he was a Private Client Advisor in the New York office of Wells Fargo Advisors and prior to that, he was with JP Morgan Securities in their International Financial Services division since 2009. He began his financial advising career with Merrill Lynch through their Paths of Achievement training program.
Mogro has over three decades of experience in the financial service industry specializing in wealth management to high net worth international clients. Prior to joining Snowden Lane Partners, she was a Private Wealth Financial Advisor at the International Private Client Service Group at Wells Fargo Advisors inNew York, catering to domestic and international clients mainly in Latin America and Europe, where she provided high-net-worth clients with strategic long-term investment guidance. She began her career in 1990 at JPMorgan Chase Bank, formerly Chemical Bank, in the International Private Banking and in the Retail Group. She gained extensive experience in sales where she held several positions. After 15 years, she transitioned to brokerage services and became a financial advisor.
Pinto-O’Keefe has over 20 years in the industry. She started at JP Morgan in 1997 as Client Advisor Assistant and Analyst, then moved on to UBS, Unique Associated, until she returned to JP Morgan in 2014 as Investment Associate of International Financial Services. She held this position until 2018, when she joined Wells Fargo.
Foto cedidaDe izquierda a derecha, Gaurav Saroliya y Joe Pak, nuevos gestores de fondos en el equipo de renta fija macro de Allianz GI. . Gaurav Saroliya y Joe Pak se unen al equipo de renta fija macro de Allianz GI
Allianz Global Investors has expanded its Macro Unconstrained Fixed Income team, which manages assets of 8.7 billion dollars across four strategies, with two new Portfolio Managers: Gaurav Saroliya and Joe Pak.
In a press release, the asset manager explained that their appointments will be effective in July and August, respectively. Both new joiners will be based in London, alongside team head Mike Riddell and Associate Portfolio Managers Jack Norris and Daniel Schmidt. Besides, Allianz GI has anticipated that the Macro Unconstrained team is set to announce the hire of one additional experienced macro portfolio manager in the coming weeks.
“With Gaurav and Joe joining the team, we can set the direction for further growth. Both bring in a rich experience in macro-driven investing and add to the broad and very diverse skill set in our team”, said Mike Riddell, Head of Macro Unconstrained.
Both managers have extensive experience in the asset management industry. Saroliya was most recently Head of Macro Strategy at Oxford Economics and Strategist at Lombard Street Research. He was previously a sell side Macro Strategist and, at the beginning of his career, spent five years helping to manage an absolute return Fixed Income fund at UBP. He has a PhD in Economics from York University.
Meanwhile, Pak joins from Rothesay Life, the UK’s largest pensions insurance specialist, where he was lead portfolio manager on a 2 billion euros European periphery bond portfolio and on the firm’s macro absolute return portfolio which he launched in 2019. He has extensive experience in trading a broad range of derivatives, both at Rothesay and also in his previous position as a trader on RBS’ US rates options desk.
The asset manager believes that Pak’s experience “lends itself particularly well to Allianz Fixed Income Macro Fund, where he will be named co-lead Portfolio Manager”. He will also be named co-deputy manager on Allianz Strategic Bond Fund, and given his rates background, deputy manager on Allianz Gilt Yield. Pak graduated with degrees in Economics and Sociology from Duke University.
Pixabay CC0 Public Domain. Los dividendos a escala mundial comienzan su recuperación gracias a la aceleración del crecimiento económico
There are clear signs of a forthcoming revival in global dividends following the first quarter of 2021, according to the latest Janus Henderson Global Dividend Index. Compared against pre-pandemic Q1 2020 levels, payouts were only 2.9% lower year-on-year at 275.8 billion dollars.
The study shows that on an underlying basis, dividends were just 1.7% lower than the same period last year, “a far more modest decline” than in any of the preceding three quarters, all of which saw double-digit falls. Janus Henderson’s index of dividends ended the quarter at 171.3, its lowest level since 2017, but the asset manager believes that growth is now likely.
In this sense, for the full year 2021, the stronger first quarter along with a better outlook for the rest of the year have enabled Janus Henderson to upgrade its expectations for global dividends. The new central-case forecast is 1.36 trillion dollars, up 8.4% year-on-year on a headline basis, equivalent to an underlying rise of 7.3%. This compares to January’s best-case forecast of 1.32 trillion.
The analysis highlights that over the four pandemic quarters to date, companies cut dividends worth 247 billion dollars, equivalent to a 14% year-on-year reduction, wiping out almost four years’ worth of growth. Even so this was a milder fall than after the global financial crisis and the sector patterns were consistent with a conventional, if severe, recession.
“The successful vaccine rollout in the US and the UK in particular is enabling society and the economies here to begin to normalise to some extent and offers encouragement for other countries following closely behind with their own inoculation programmes. Even so with infection rates still out of control in Brazil and India, and the third wave in Europe still curtailing economic and social activity while the vaccines are administered, there is still a lot of uncertainty for company profits and, in turn, dividends”, said Jane Shoemake, Client Portfolio Manager on the Global Equity Income Team at Janus Henderson.
On top of this, there remain political sensitivities around shareholder payments, while the timing and extent of the removal of regulatory restrictions on banking dividends, especially in Europe and the UK is still unclear. The asset manager also expects share buybacks to return as a use for surplus cash and this too will influence how much is returned via dividends (especially in the US). All these factors are adding a layer of unpredictability to dividend payments.
“Despite this uncertainty, we are more optimistic given that Q1 was undoubtedly better than expected and we are now more confident that companies are willing and able to pay dividends, especially those companies that have traded well”, Shoemake added. In her view, there is certainly much less downside risk to payouts this year than previously anticipated, though the timing and magnitude of individual company payouts is going to be unusually uneven and this will add volatility to the quarterly figures.
“Special dividends will play a role too. Since late last year we have been adding to areas of the market that will benefit as economies reopen and where there is increased confidence in a business’s ability to generate cashflow and pay a dividend. As we move into the second quarter, the year-on-year comparisons will look very positive because it was the worst period for dividend cuts last year”, she concluded.
The first quarter: dividend recovery mixed across markets
Globally, just one company in five (18%) cut its dividend year-on-year in the first quarter, well below the one third (34%) over the last year overall. North America has seen dividends fall far less than other parts of the world: payouts of 139.3 billion dollars were 8.1% lower year-on-year on a headline basis, though the decline was due almost entirely to unusually large US special dividends last year not being repeated. On an underlying basis, the 0.3% fall in North American dividends was better than the global average of -1.7%.
The analysis points out that the first quarter is “usually relatively quiet” for European dividends, but this year there are positive signs ahead of the seasonally important second quarter. Payouts in Europe (ex-UK) rose year-on-year, up 10.8% on a headline basis to 42.5 billion dollars, boosted by catch-up payments from Scandinavian banks. Equally Switzerland made a disproportionate contribution in Q1 and companies there have also proven resilient. One third of European companies that usually pay in the first quarter cut their dividends year-on-year, but this compares to just over half in the previous three quarters.
In the UK, the first quarter saw lower dividends than a year ago, down 26.7% on an underlying basis as the country continued to feel the effects of the oil company cuts. However, less than half of British companies in the Janus Henderson index cut dividends in Q1, much better than over the last year. There are also signs of a revival with the headline total for UK dividends rising 8.1% in Q1 thanks to a number of extra payouts and special dividends.
Lastly, dividends from Asia-Pacific ex-Japan were 6% lower on an underlying basis, with the 16.9% fall in Hong Kong making a significant impact. This meant the asset manager’s index of Asia-Pacific’s dividends fell to 190.6. In general, emerging markets were boosted by dividend restorations in Brazil, India and Malaysia.
Citi has appointed Meredith Chiampa as new Head of ESG for North American Markets. In an internal statement accessed by Funds Society, the firm revealed that she will lead ESG client engagement, product development, and the monetization strategy for ESG in the region.
“She will work closely with product partners to develop and deliver ESG products and services to help our clients achieve their individual ESG objectives. As one of the lead architects of the Citi World ESG Index, Citi’s new ESG benchmark, and with 17 years of experience in Multi-Asset Structuring, Meredith brings a wealth of expertise to the role”, Elree Winnet Seeling, Head of ESG for Markets and Securities Services at Citi, published in her LinkedIn account.
In her new role, Chiampa will report to Dan Keegan, Head of North American Markets, locally and to Winnet Seeling globally. She will replace Jayme Colosimo, who over the last eight months helped frame and build the Markets ESG offering. “We want to thank Jayme for her leadership over the last eight months and wish her great success in her new role as Head of NAM Business Advisory Services”, they pointed out in the internal statement.
Chiampa joined Citi in 2004 and brings 17 years of experience to her new role. The majority of her career has been in equity structuring as part of the Multi Asset Group, where she oversaw the development and growth of the investor structuring business, and more recently focused on creating solutions for private clients and originating business for cross asset sales.
“I am very excited by this opportunity and can’t wait to help drive our markets ESG strategy moving forward!”, wrote Chiampa in her LinkedIn.
Pixabay CC0 Public Domain. HSBC AM incorpora un equipo especializado en tecnología climática y prepara un primer fondo de capital riesgo
HSBC Asset Management has hired a Climate Technology (Climatech) team as part of its strategy to expand direct investment capabilities in alternatives. The new team will develop a venture capital investment strategy providing clients with opportunities to invest globally in technology startups who are addressing the challenges of climate change.
In a press release, the asset manager revealed that the strategy will focus on companies across the energy, transportation, insurance, agriculture and supply chain sectors. The first fund is planned to be launched before the end of the year with an intended cornerstone investment from HSBC.
The team will report to Remi Bourrette, Head of Venture and Growth Investments, who arrived at the firm last year from HSBC Global Banking and Markets. As for the new recruits, Christophe Defertjoins as Head of Climate Technology Venture Investments. He has over 16 years’ experience in investment banking, private equity, corporate M&A, energy contracts and venture capital. Before joining HSBC Asset Management, he spent 10 years at Centrica where he most recently built and led Centrica Innovations’ Venture effort globally.
Also Michael D’Aurizio has been appointedInvestment Director, Climate Technology. Hehas over 10 years’ experience in power, utilities, and clean energy including business strategy and venture capital, and previously led Centrica Innovations’ US activities.
“Technology will play a major role in enabling the energy transition, funded by public money, private capital and philanthropic commitments like HSBC’s Climate Solutions Partnership with the World Resources Institute and WWF. The appointment of this team will allow us to provide clients with early exposure to sectors which are just emerging as such, but will become major sources of financial and environmental value over the decade”, Joanna Munro,Global CIOatHSBC Asset Management, commented.
In 2020, HSBC Asset Management set out its strategy to re-position the business as a core solutions and specialist emerging markets, Asia and alternatives focused asset manager, with client centricity, investment excellence and sustainable investing as key enablers. The firm currently manages 45 billion dollars in alternatives strategies.
The trajectory of the onshore Chinese bond market has been positive over recent years with increasing inflows. Eight percent of the market is already owned by offshore investors, which includes about 3% foreign ownership, and this is up from virtually 0% just 5 years ago. The IMF SDR (’15), the JPM GBI-EM (Feb ’20) and the FTSE WGBI (Oct ’21) have all created demand for local Chinese bonds and Bond Connect has helped create a path to satisfy that demand, with average daily trading volume in April at RMB24.7 billion.
However, as with most things, it takes time – time for funds to recognize that the benefits outweigh the costs (operational, execution, setup) and time to get approval to trade in the onshore market as an offshore participant.
If Bond Connect were easier to deploy, more funds in the US, Europe and Japan would have pre-positioned in the lead-up to China bonds being included in the FTSE Russell WGBI. Once funds are greenlit, it will be a steep trajectory for inflows. With that, investors will see more strategies oriented towards offshore investors and a huge push for green bond issuance (already 13% of the market and the 2nd largest green bond market in the world) which is a major topic for investors in the west.
Given China’s ambitious net-zero carbon target by 2060, the country will require trillions of yuan in new investments to revamp its carbon-intensive economy and energy system over the coming four decades. This will pique the interest of many funds given the average yield of Chinese green bonds was 3.44% as of March 31st, compared to 0.58% for the Barclays MSCI Global Green Bond Index.
Source: Goldman Sachs
China debt inclusion in the Russell flagship benchmark (FTSE Russell WGBI) will be a gamechanger in terms of foreign investors’ strategic allocations.The inclusion can’t be ignored, as an estimated $2-4 trillion in assets follow this index. It will make China the sixth largest market by weight and will have the second highest country group yield in the FTSE World Government Bond Index (WGBI) behind only Mexico, but with a much larger weight (5.25% vs .6%) thereby pushing the overall index yield up 15bps. It may not sound significant, but it is, considering the whole index only yields 32bps today. Monthly passive inflows will likely total US$5-7.5bn a month (3x today’s pace) from October 2021.
There will likely be a 36-month phase in after that (in-line with previous inclusions). We should expect an acceleration of inflows (2x today’s pace) which could lead to a market driven compression of yields which was the case when Malaysia and Mexico were added to the index in 2007 and 2010, respectively.
The inclusion also provides a stamp of approval around liquidity, policy transparency and currency management that have kept many offshore managers at bay for years. For many funds, navigating the local landscape was a daunting prospect. With this inclusion, the prospect is far less scary.
Source: Goldman Sachs
The Chinese government’s management of Covid-19 along with recent policy changes have made its bond market more attractive to institutional investors. While policy makers elsewhere were cutting funding rates, expanding balance sheets and increasing fiscal spend, Chinese counterparts were more austere, and in some cases, they even tightened policy. The goods and digital economy in China far outweigh the service economy so less structural support was needed.
Why does this matter? Chinese rates were stable and even higher in absolute terms while bond yields were plummeting elsewhere with some credit fundamentals deteriorating. The Covid-19 pandemic has really been a goldilocks situation for Chinese bonds. After the initial shock of the pandemic, investors started to realize China offered a unique opportunity and we saw flows into Chinese local bonds ramp up in the second half of 2020.
Default risk in China has always been more about refinancing risk than leverage. Seventy-six companies have roughly $50bn of repayment pressure over the coming months. Moody’s forecasts the trailing 12-month default rate for these firms will fall to 3.5% at year-end from 7.4% at the end of 2020. Continued supportive fiscal and monetary policies and better pandemic containment with vaccination rollouts also play a role in the improvement.
Still, weaker firms’ funding channels “could be restricted” following guidance last month from China’s supervisor of state-owned assets regarding bonds’ proportion of total debt at riskier firms.
In the private credit sector, there can be too much gearing, forex risk, and/or secular headwinds. This risk is far easier for international investors to tolerate, understand and navigate than the SOE risk. If a company has 8x debt to EBITDA and a majority of that is in FX despite most income being in local currency, there is potential solvency risk. It’s high yield for a reason.
Regulators have stepped in to limit home price growth and home development. That means the property names that grew unchecked for years by accessing cheap financing in USD and using it to amass disproportionately large land banks, now find themselves on the wrong side of regulation. These corporations have a lot of assets that they cannot offload or develop along with acute debt service costs.
Regarding SOEs, bank regulators are doing what they can to limit future default risk by guiding the so-called zombie corporations towards insolvency. By doing so, they are pruning fundamentally impaired institutions before they become a systemic issue and cause contagion. We applaud these measures. Coal names come to mind most readily with the default of Yongcheng in late 2020 just weeks after they issued bonds. Fortunately, it was only RMB 1 billion, so it wasn’t a systemic issue. SOEs have some 5.4 trillion yuan of bonds maturing this year. Net bond financing has been negative for more than a dozen provinces since Yongcheng Coal’s default in November.
Ayman Ahmed is a Senior Fixed Income Analyst at Thornburg Investment Management.
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Founded in 1982, Thornburg Investment Management is a privately-owned global investment firm that offers a range of multi-strategy solutions for institutions and financial advisors around the world. A recognized leader in fixed income, equity, and alternatives investing, the firm oversees US$45 billion ($43.3 billion in assets under management and $1.8 billion in assets under advisement) as of 31 December 2020 across mutual funds, institutional accounts, separate accounts for high-net-worth investors, and UCITS funds for non-U.S. investors. Thornburg is headquartered in Santa Fe, New Mexico, USA, with additional offices in London, Hong Kong and Shanghai.
Foto cedidaGregor Hirt, nuevo director de inversiones global de multiactivos de Allianz GI.. Gregor Hirt, nombrado director de inversiones global de multiactivos de Allianz GI
Allianz Global Investors has announced in a press release the appointment of Gregor Hirt as Global CIO for Multi Asset as of July 1. He will be based in Frankfurt and report to Deborah Zurkow, Global Head of Investments.
In his new role, Hirt will work closely with the firm’s Multi Asset experts in Europe, Asia and the US to ensure Allianz GI continues to strategically develop and grow its Multi Asset business in areas of client demand, including risk management strategies and multi asset liquid alternatives.
Hirt brings 25 years of experience in Multi Asset investing from both a wealth management and asset management perspective. He joins from Deutsche Bank, where he has been Global Head of Discretionary Portfolio Management for the International Private Bank since 2019. Prior to that, he was Group Chief Strategist and Head of Multi Asset Solutions at Vontobel Asset Management, having also gained strong experience at UBS Asset Management, Schroders Investment Management and Credit Suisse.
“Allianz GI has a rich heritage in Multi Asset investing, with one of the strongest teams in the industry. Marrying the best of our deep expertise in both quantitative and fundamental approaches, while integrating ESG considerations, will be pivotal in ensuring that our offering is as successful for clients in the next generation as it has been in the past. With just the right mix of leadership experience, market insight and client understanding, we are delighted to be welcoming Greg. As well as significant experience across asset management and wealth management, he has deep appreciation for quantitative discipline while having a background in fundamental analysis”, highlighted Zurkow.
Allianz GI currently manages 152 billion euros in Multi Asset portfolios for retail and institutional clients around the world. AllianzGI’s Multi Asset investment approach combines a systematic assessment with the insights of fundamental analysis with the dual objective of mitigating risks and enhancing return potential for clients.
Pixabay CC0 Public Domain. Los gestores siguen siendo optimistas sobre los lanzamientos de megafondos en China
China is a major player in the global fund industry. Blockbuster fund initial public offerings (IPOs), which have seen popular new funds being oversubscribed and sold out within a day after sales commence, have become more common in the country over the past few years. While short-term investor sentiment has been hurt by the recent market downturn, Cerulli Associates points out in its latest analysis that the trend could resume over the long run.
China’s mutual fund assets under management, including that of ETFs, recorded robust year-on-year growth of 37.5% to reach 19.7 trillion renminbi (3 trillion dollars) in 2020. Total assets garnered through mutual fund IPOs reached 3.2 trillion renminbi, double the size in 2019. The average IPO volume of new funds also improved to 2.2 billion renminbi, compared to 1.5 billion in 2019.
Local media reports show that in 2020, over 100 new funds were sold out within one day after subscriptions commenced, and 15 of these IPOs successfully garnered assets of over 10 billion renminbi. “The trend continued in the beginning of 2021, according to China Fund News reports, when a total of 122 new mutual funds were rolled out in January, raising assets of almost 500 billion renminbi, the second largest monthly amount for IPO assets recorded in the market”, Cerulli says.
Among the factors behind blockbuster new fund launches the firm identified are optimistic investor sentiments, star managers with good track records, and sufficient liquidity in the market. Over the past few years, the Chinese government has introduced a series of monetary easing measures to stimulate the economy following the U.S.-China tensions and COVID-19 pandemic. “Part of the money supply went to the real economy and real estate market as traditional long-term investment vehicles for local residents, while the rest was available to asset management products. This created plenty of opportunities for mutual funds, as other investment products in general are not attractive enough”, they add.
In this sense, some managers Cerulli spoke with said that the fast-track fund approvals introduced by the China Securities Regulatory Commission (CSRC) have also facilitated their new fund launches. Extensive marketing efforts and digital distribution have also supported mega fund launches.
Following this year’s Chinese New Year holiday, the stock market plunge dampened investors’ interest in new fund launches. However, despite the potential challenge to fundraising, the firm’s analysis shows that managers focused on the long term are still upbeat about the industry’s prospects, and are “confident that mega fund launches will resume if the stock market turns bullish again”.
In Cerulli’s view, mutual funds’ long-term growth prospects should continue because profits earned by listed enterprises which survived COVID-19 will eventually enter the stock market, and funds have an inherent advantage over other financial products.
“The cooling of market sentiments is normal, and it is also an opportunity to educate small-ticket young investors who have not experienced many market cycles. As long as the recovery does not take too long and a bear market is avoided, the long-term outlook for mutual fund IPOs should remain positive”, said Ye Kangting, senior analyst at the firm.
The independent investment advisory firm Insigneo continues to boost its New York network with the hiring of Margaret Rivera, who joins from Wells Fargo’s International office.
“Insigneo is continuing its New York City expansion, please welcome our new International Financial Advisor Margaret Rivera from Wells Fargo’s International office in NY. Margaret has been a financial advisor covering clients across the globe for over 29 years”, reads the company’s posting on its LinkedIn profile.
Rivera started in the financial services industry at Smith Barney in New York. She spent the majority of her career at Chase Investment Services and at Citi International, where she worked for 17 years before joining Wells Fargo.
“Margaret brings a wealth of experience in international markets to our new Insigneo NY office in Midtown Manhattan, she is a great addition to our team. We are looking forward to working with her and continuing to expand our footprint in New York City”, said Jose Salazar, Head of Business Development for the US Offshore market at Insigneo.
Meanwhile, Rivera claimed to be “very pleased” to be part of an expansion which “truly caters” to the international client. “I am reunited once again with former colleagues from Citigroup and Wells, and most importantly: my clients won’t have to worry on any business model changes because International is the core model for Insigneo. It is perfect all around and it just feels right”, she insisted.
This appointment comes after the recent opening by Insigneo of a new office located in midtown Manhattan and the hiring of Alden Baxter and Adelina Rodriguez.
It is in one area in particular where listed infrastructure is emerging as a viable alternative to its private counterpart: clean energy.
It’s abundantly clear that renewables and sustainability-related sectors will be a magnet for infrastructure investment in the coming years. Both governments and an increasing number of large multinational corporations have committed to ambitious carbon reduction targets in the post-Covid era.
This will require trillions of dollars of capital to be re-directed to clean energy assets. The shift was already gathering momentum prior to the public health crisis.
In the year before the pandemic, the renewables sector had accounted for the largest share of private-sector infrastructure investment. It drew in more than USD40 billion in new capital in 2019 alone – or over 40 per cent of the total amount invested in infrastructure that year. This is up from 20 per cent at the start of the decade (1).
That looks modest compared with what could unfold. According to the International Renewable Energy Agency, cumulative investments in the energy system will need to increase 16 per cent to USD110 trillion between 2016 and 2050 from what’s currently planned to meet climate targets.
If that happens, investment opportunities in the electrification and infrastructure segment – which includes power grids, EV charging networks and hydrogen or synthetic gas production facilities – could expand to as much as USD26 trillion by 2050. It is a similar picture in renewables.
Public infrastructure: gaining depth
And there are reasons to believe that the public market could attract a significant share of this capital.
The rise of blank-check financiers, popularly known as SPACs (special purpose acquisition companies), is a crucial development in this regard.
SPACs start off with no assets and go public to pool capital with the intention of merging or acquiring targets. They provide a quicker and more efficient alternative for firms to raise capital than through a traditional public listing.
According to US law firm Vinson & Elkins, the number of announced “de-SPAC” transactions by clean energy companies – or the post-IPO process of the SPAC and the target business combining into a publicly traded operating company – set a record in 2021 while IPOs of energy transition SPACs have been equally robust.
Among the most popular industries targeted by SPACs are electric/alternative fuel vehicles, vehicle autonomy and grid-level battery storage (2).
The V&E report adds: “with projected capital requirements to meet carbon goals and deep investor appetite for these investments, activity to date may be but a prelude to even more robust activity over the next decade.”
The average clean-energy SPAC is estimated to have an anticipated enterprise value – a measure of a company’s potential takeover value – of USD1.8 billion (3).
Traditional IPOs in the clean energy industry are also strong in some regions. In Spain, partly in response to the EU’s green recovery investment plan, at least four companies, including Repsol, are working on possible IPOs of renewable assets this year.
Green infrastructure for impact
As the world accelerates efforts to decarbonise and become more resource efficient, listed infrastructure firms specialising in clean energy and sustainable solutions are both a complement and alternative to private assets.
Listed infrastructure stocks, especially in clean energy and sustainable sectors, also allow investors to align their investment return objectives with their environmental and social goals.
Pictet Clean Energy strategy: investing in energy transition
Pictet AM’s Clean Energy strategy is ideally placed as a complement for institutional investors looking for exposure in sustainable infrastructure.
The strategy invests in companies supporting and benefiting from the energy transition. It aims to deliver long-term capital growth with a scope to outperform major global equity indices over a business cycle.
The strategy invests in broad and diversified clean energy segments, not only in renewable energy but also technologies, innovations and infrastructure supporting smart mobility, energy efficient buildings and efficient manufacturing.
Utilities and industrials make up at least 40 per cent of the portfolio.
About a third of the portfolio is directly exposed to infrastructure assets and investments, while the remaining has indirect exposure which should also benefit from growing inflows into green infrastructure.
The portfolio is nearly 100 per cent exposed to US President Joe Biden’s USD2 trillion stimulus.
Launched in 2007, Clean Energy strategy has a track record that is one of the longest in the industry. The experienced team that manage the Clean Energy strategy sit within our pioneering Thematic Equities team that manages around USD53 billion across a range of strategies.
Data as of 31/03/2021.
Opinion written by Xavier Chollet, Senior Investment Manager in the Thematic Equities Team co-managing the Clean Energy Strategy at Pictet Asset Management
(1) Source: Global Infrastructure Hub. Investments combining debt (75%) and equity (25%) flows.
(2) Source: Vinsons and Elkins, 13.01.2021
(3) Shayle Kann, a San Francisco-based managing director at Energy Impact Partners, in an InterChange podcast entitled “The Cleantech SPAC Attack.”
Información importante:
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