Listed Equity Infrastructure
Some of our clients consider the Essex Global Environmental Opportunities Strategy (GEOS) to be a way to gain access to the attributes of infrastructure, with its potential for long-term growth coupled with inflation hedging. GEOS is long-only, global, and focused across nine environmental themes, all solving the need to harness economic growth with fewer resources. GEOS owns the public equity shares of companies enabling infrastructure development, or enhancing the planning, development and maintenance of infrastructure assets. Some clients have told us they place GEOS in the infrastructure asset class, with advisors using GEOS as a differentiator to direct infrastructure assets.
Infrastructure development is capital intensive, with the upfront investment being monetized over time in cash flows as the asset is monetized. Across the GEOS themes, segments such as water, sustainable finance and power technology have public equity exposures to companies developing water management infrastructure and the electrical grid. Examples include technologies that enable potable water supply and purification, electrical grid construction and energy efficiency technologies. Environmental finance holding Hannon Armstong Sustainable Infrastructure Capital finances and develops energy efficiency and solar energy projects for large facilities such as US military bases or municipal buildings that lower operating costs through energy savings. Another area is industrial automation – enhancing the productivity of manufacturing assets within a commercial facility that improves worker safety and productivity. Currently, we estimate over 64% of GEOS holdings have direct and indirect exposure to sustainable infrastructure globally. Given the need for enhanced infrastructure with macro drivers such as severe weather, increased power consumption and water access, we believe this exposure to be opportunistic for long-term asset owners and perhaps an effective way to categorize GEOS.
Disclosures:
This commentary is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. The opinions and analyses expressed in this commentary are based on Essex Investment Management LLC’s (“Essex”) research and professional experience and are expressed as of the date of its release. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is intended to speak to any future periods. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.
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