Tough times don’t last, but would tough investors?
Is the current environment the toughest investment climate witnessed by the investor community in years? The industry has also raised concerns at many junctures that while there is enough capital to invest, there aren’t as many investment-worthy assets. At a recent roundtable in New York City, management from Australia’s IFM Investors provided more insight on these issues.
Chief executive Brett Himbury told attendees that the current climate is the “toughest environment for investors and limited partners (LPs) in 30 years”.
He elaborated upon the reasons for this stating that, overall, it is a difficult decision-making environment since interest rates are at an all-time low, which are only now inching upwards. Monetary policy around the world has been in quantitative easing mode over the past years, and only now moving to a non-QE environment.
“Trust in most institutions is at an all-time low,” Himbury added, quoting a recent study. “For the first time in 18 years, there is a mistrust in every institution whether it is corporates, media firms, non-profits.” He added that geo-political uncertainty globally is concerning and there is a high agenda of nationalization everywhere.
With the intensity of regulation being high and higher fund fees, fund managers have to do a better job, Himbury warned.
IFM broadly invests in four asset classes: debt investments, listed equities, infrastructure and private equity. The fund is backed by 27 Australian superannuation fund shareholders. It has A$113bn funds under management and represents 329 institutional investors. IFM Investors completed the acquisition of a 49% stake in FCC Aqualia in 2018. The purchase marked the Australian fund’s first investment in a water management company in continental Europe.
Julio Garcia, head of infrastructure for North America, said that across the US, the market is still lagging in the infrastructure space in terms of the type of infrastructure model and ways of financing it. “Infrastructure is an issue that has bipartisan support and we are hopeful it will get the attention it deserves.”
However, he added that the US market is still quite deficient in how to finance infrastructure and how to get the best operating model in place.
We explore these themes in a more detailed article in the next issue of P3 Bulletin