QUAERO CAPITAL recently completed fundraising for QUAERO EUROPEAN INFRASTRUCTURE FUND III (QEIF III) in December, exceeding €1.4 billion in commitments and surpassing the initial target of €1.25 billion announced at its launch in the second half of 2023. The management company also raised an additional €400 million in co-investment capacity alongside QEIF III. Since its launch 10 years ago, QUAERO CAPITAL has therefore raised a total of €2.7 billion for its infrastructure business.
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Is the AI Industry in a “DeepSeek”?
Over the weekend, a Chinese AI start-up funded by quant fund manager Liang Wenfeng released a new version of its large language model (LLM), named DeepSeek. Early reports indicate that DeepSeek’s performance is similar to that of U.S. competitors such as OpenAI and Meta.
Artificial intelligence sets the rules in the electricity market
The infrastructure sector (defined by the S&P Global Infrastructure TR USD) has had a reasonable first half of the year with a performance of +4.3% YTD. The two key sources of performance for the index were the power generation and the midstream energy sectors.Read more
Five questions for an investment manager
1. You have worked for several major banks in your time in finance. How have you seen the development of alternative assets, such as private equity and infrastructure, developing in private client portfolios?
Alternative assets such as private equity are now very much in focus for private clients. When I was responsible for private equity at Lombard Odier, buy-out and venture capital funds were sought after, but had to be specifically structured for private clients. Now private investors are also exploring infrastructure, property, credit, and secondary private equity in an attempt to diversify their portfolios. Challenges such as liquidity and institutional structures are now being addressed.
Listed infrastructure: 2024 Outlook
Global infrastructure stocks’ performance stood in contrast to broader equity markets in 2023, which rose on the strength of just a few sectors, led by technology (which rallied sharply on optimism surrounding advancements in artificial intelligence).
Distribution and transmission networks
We have been hearing for 20 years that the electrical infrastructure in the United States is obsolete, (with an average age of 40 years), and the long-awaited wave of investment is still to come. Europe is the same, with an ageing infrastructure (also 40 years old on average, according to a European Union report). Against this backdrop, we believe that infrastructure offers an investment opportunity.
Infrastructure: two themes for 2024
The rise in interest rates in 2023 has had a negative impact on the infrastructure sector, whose valuation is often closely linked to the discount rate used to assess its value. As a result, the indices concerned underperformed, with the S&P Utilities falling by 10% over the year, compared with a rise of the same order for the Dow Jones Industrials. For its part, the global infrastructure index only just managed to end the year in positive territory (+1%). We are therefore satisfied with the performance of our infrastructure fund, which posted a result of +5.1% for the year 2023, overperforming its benchmark* by 2.9 percentage point.
Listed infrastructure: essential links in a changing world
Infrastructure companies provide the physical framework essential to the smooth running of a community. Utilities, transport, energy, schools, hospitals, as well as communications, water and waste treatment, all provide the framework conditions that are essential to the smooth running of our modern society.
Naturally, societal transformations go hand in hand with the upgrading of the infrastructure that underpins their development.
Infrastructure: a sector that can no longer be ignored
QUAERO CAPITAL has made significant investments in the infrastructure sector, both in listed infrastructure and in the financing of projects in private markets. This asset class offers a number of advantages in terms of both the nature of the investments and the specific characteristics of the sector. In any case, including a portion of infrastructure in a diversified portfolio seems very appropriate in the current environment.
Infrastructure and real interest rates
Infrastructure is an attractive asset class overall for a number of reasons: diversification in portfolios, contractual and regular cash flows, resilience over the economic cycle (low beta), vital importance to society (digital and energy transition) and the benefits of longevity.
Protection against inflation
Investors also often see the infrastructure asset class as a good way of hedging against inflation. One of the main characteristics of this sector is that the companies in question often benefit from price indexation formulas built into their contracts. But the definition of infrastructure continues to evolve and its scope to expand. It is therefore essential to take a nuanced view of each asset to check whether it really has the usual characteristics of the infrastructure sector.