Issue Q2/2011


B CAPITAL PARTNERS (BCP) is pleased to share with you its most recent newsletter. As investment advisor to institutional investors, BCP focuses on infrastructure, PPP and clean energy investments and offers “tailor-made” investment solutions with specific risk/return characteristics. The long time horizon of infrastructure and renewable energy investments provides portfolio enhancement features. These may include foreseeable cash yield returns, portfolio diversification and inflation hedging as well as “tick the SRI box”. In this newsletter we would like to draw your attention to the following interesting topics:

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“GOING DIRECT” – INSURANCE GROUPS AND PENSION FUNDS INVESTING DIRECTLY


In the past six months we have been recording growing evidence that European and US pension funds and insurance companies are following the historical lead of Canadian and Australian institutions, with respect to directly investing in assets or portfolio of assets. Direct investments in any development stage provide investors with high allocation transparency and control over the risk profiles of acquisitions and - equally important - divestment of assets. The long duration of stable, high yielding assets in the portfolio is of particular relevance to many investors. Unlike most fund managers, they have a long-term hold strategy for “core infra” assets with the clear purpose to serve as inflation-protection in their overall allocation. At the same time, secondary directs enable an immediate cash yield. Moreover, thanks to their relatively low fee structure compared with e.g. fund investments, these kinds of transactions finally allow investors to “afford” investing in truly low risk assets while still being able to receive sufficiently high, stable, attractive returns.

A number of articles in the press have commented on this strategy and have provided recent examples:
http://oxfordswfproject.com
http://www.reuters.com
http://www.businessgreen.com

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FUNDING CLEAN ENERGY

During 1Q2011, BCP has noticed several new solutions for the financial support of the green economy.

1) UK releases parliamentary report on the green investment bank
After the Fukushima disaster many governments, politicians and corporations, especially in Europe, have renewed their commitment to renewable energy. Timely while unrelated, the UK Environmental Audit Committee has released its report on the formation of the Green Investment Bank, a new institution that will help secure funding for the hundreds of billions of pounds the Committee believes are necessary for the UK to reach new low carbon standards by 2025. These trends will result in a wealth of investment opportunities in clean energy technologies, power generation, and transmission infrastructure, not only in the UK but also elsewhere in Europe.

The full report can be accessed here: http://www.publications.parliament.uk

2) Alternative funding for power and utilities infrastructure
Ernst&Young analysed the quest for new financial sources by utilities and power generating companies in the report “How power and utilities companies can finance future investment”. The report predicts that only through alternative sources of capital, mainly at project level, energy players might cope with the huge investment needs (USD 17 trillion by 2035) the market is asking for.

http://www.ey.com (.pdf)

3) OECD will publish a paper on “the role of pension funds in releasing green growth initiative”
The OECD has just issued a draft paper outlining the role the US$ 28 trillion of pension fund assets can play in the transition to a global low-carbon economy in development countries. The paper focuses on green bonds and alternative investments in existing renewable energy technologies. It was released in advance of an OECD conference in Nigeria but is targeted towards the bigger role pension fund investment can play globally.

The full report can be accessed here: http://www.oecd.org (.pdf)

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HOW INFRASTRUCTURE "ADDS VALUE AND RESILIENCE TO YOUR PORTFOLIO"

AMP Capital has commented on the impact infrastructure investments can have on the overall structure and profile of overall investment portfolios. Its report discusses the benefits of such investments based on their possibly stable and consistent returns. In addition, the report elaborates on how infrastructure assets in a portfolio can act as natural hedge against a number of factors such as market volatility, economic cycle and inflation.

The full report can be accessed here: http://www.ampcapital.com

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IN-DEPTH ANALYSIS OF INFRASTRUCTURE FUNDS MANAGERS’ BEHAVIOUR

Deloitte has published a paper on the future of the infrastructure funds market. Amongst others, the report comments on the narrowing focus of infrastructure funds to invest in assets with particular risk return profiles in order to meet investors’ more sophisticated understanding of the market. It also elaborates on the increasing number of pension funds entering the market for direct investments to satisfy their specific need for low-risk assets (see also articles above).

The full report can be accessed here: http://www.deloitte.com

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B CAPITAL PARTNERS – NEW ASSOCIATE PARTNER & NEW WEBSITE

BCP is proud to announce and happy to welcome Cameron Edwards to its team as Associated Partner. His wealth of infrastructure investment and transaction experience across continents fits perfectly well with investors’ desire to go direct and BCP’s dedicated investment services in this space. More about Cameron and the team can be found on our newly lounged website:

http://www.b-capitalpartners.com

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Responsible for this Newsletter is:
B CAPITAL PARTNERS
Paolo Alemanni, Konstantin von Falkenhausen, Dr. Barbara Weber
Susenbergstraße 108, CH-8044 Zurich, Switzerland
office@b-capitalpartners.com
www.b-capitalpartners.com