TRANSFORMATIVE TRENDS | Power Reliability and Flexibility
The conversation around enhanced power stability is more pertinent today than ever as we continue to witness the increasing impact of climate change. As we work to transform assets that support the energy transition, securing our power supply remains a critical issue.
In the latest episode of Partners Group's 'Transformative Trends' podcast series, Julien Bedin, Lead Infrastructure Investment Researcher, discusses Power Reliability and Flexibility, highlighting the role natural gas can play in supporting the energy transition, and why power stability will be an attractive opportunity for infrastructure investors for many years to come.
POWER RELIABILITY AND FLEXIBILITY
The global shift to net zero carbon is one of the key sector themes driving our sourcing strategy across the infrastructure asset class. By 2050, more than 60% of global power production will come from renewable sources, where this is less than 20% today, increasing the need for a resilient and flexible grid.
We are pleased to share Partners Group's latest Thematic Research paper on investing in power reliability and flexibility infrastructure, discussing the six power reliability and flexibility solutions that we believe offer the most compelling risk/reward.
In the latest issue of Partners Group's Quarterly Loan Market Commentary, we look back on a momentous year for loan markets. For many loan investors, 2020 returns were largely driven by whether they sold in the market trough, thereby locking in deep losses, or held on.
THE INDUSTRY VIEW | Entrepreneurial Governance
In this episode of the Partners Group Podcast, we get "The Industry View" from one of our Lead Operating Directors, Luisa Delgado, Chair of Partners Group portfolio company Schleich, one of Germany's largest toy manufacturers. Luisa talks to our Global Head of Communications Jenny Blinch about the impact of business on society, leadership through difficult times, and how working with Partners Group changed her mind about private equity.
TRANSFORMATIVE TRENDS | Thematic Sourcing
Our first episode of the Partners Group Podcast's "Transformative Trends" series features Christina Han, our Head of Investment Research, who explains her work on Thematic Sourcing at the firm. As Christina says, Thematic Sourcing is the fundamental process behind how Partners Group identifies the assets we want to invest in – beyond those already available on the market. Honing this strategy is more important than ever as competition for good assets becomes increasingly fierce.
The Industry View
In this interview, Luisa Delgado, an entrepreneur with extensive board experience and Chair of Partners Group portfolio company Schleich – one of Germany’s largest toy manufacturers – discusses ESG and sustainability at Schleich, the growing consumer attention on the environmental and societal impact of businesses, and what it has been like working with private equity to build resilience and create value for the long term.
Offense remains the best defense
The uncertainty we see today creates challenges, but also opportunities, for companies and their investors. In this climate, we firmly believe that offense remains the best defense. Our thematic investment strategy, which targets transformative trends, combined with hands-on value creation at asset level, is guiding our investment efforts and helping us to steer our portfolios through these choppy waters.
In this issue of the Quarterly Loan Market Commentary, we discuss how the US capital markets wrestled with the many challenges presented by the Covid-19 pandemic throughout the summer of 2020. However, US leveraged loans remarkably stabilized further in Q3, with institutional loan investors again returning in force with a "risk-on" mentality. In Europe, the loan market also remained reasonably constructive in Q3, despite the typically quiet vacation month of August. Spurred by demand from new CLO formation, institutional loan issuance in Europe was only slightly below Q2 levels.
Creating the office of the future
The pandemic has been a massive global experiment in remote working and the shift to virtual communication has been more successful than many business leaders anticipated. Indeed, many now expect flexible working to become the norm. But what does this mean for the management of office space? In this Q&A, Head of Private Real Estate Asset Management Jessica Wichser explains how Partners Group has continued to create value in the office sector through the crisis and how the pandemic may shape the office of the future.
The great Australian renewables opportunity
Following Partners Group's investment in Murra Warra II Wind Farm in July 2020, our Private Infrastructure Asia team discusses the advantages of wind farm platform strategies, the rigors of transacting in the midst of a global pandemic, and the next generation of energy transition investments across Asia Pacific.
The debate on including PE in 401(k) plans
BY DAVID LAYTON, CO-CEO
In this blog, David Layton, Co-Chief Executive Officer, Partners Group, says it has been largely overlooked that American businesses stand to become a principal beneficiary of the Department of Labor's guidance in June that defined contribution plans can prudently include private equity strategies in their investment options.
In this issue, we examine the continued uncertainty created by COVID-19 in the US and Europe. Despite challenging headwinds, numerous loan issuers were still able to access liquidity through drawing on revolver facilities or incremental loan or bond issuance, while some other companies found sufficient investor demand to clear new issues tabled in Q1. A combination of improving investor sentiment, massive governmental market intervention, and some promising medical advances toward COVID-19 treatment and vaccines prompted a surprising “risk on” mentality to sweep through the US loan market.
The secondary approach: maintaining discipline during a crisis
As investors absorb the impact of the COVID-19 global health crisis, many perceive secondaries investments to be a rare bright spot in an uncertain market. Anthony Shontz, Managing Director and Co-Head Private Equity Integrated Investments Americas at global private markets investment manager Partners Group, explains how discipline, creativity and flexibility are key to successfully navigating a global private equity secondaries platform through today's unprecedented environment.
Steering the Global Investment Committee through rough seas
As Chairman of Partners Group's Global Investment Committee, René Biner not only evaluates hundreds of new investment opportunities every year, but also keeps a close eye on the firm's existing portfolio of companies and assets spanning multiple sectors and geographies. With the COVID-19 global health crisis affecting almost every segment of the economy, neither of these tasks has been easy. However, while René believes social distancing may be around for longer than we might wish for, he has reason to be optimistic about the future of private markets investments.
How to stay cyber safe during a global pandemic
One of the side-effects of the COVID-19 global health crisis has been a large spike in online criminal activity. Cyber attackers are using every conceivable strategy to take advantage of the crisis, from fake Coronavirus cures and ransomware attacks on vaccine test centers to attacks on the World Health Organization itself. In our latest Q&A, we speak to Patrik Bless, Chief Information Security Officer at Partners Group, to understand what the risks are and how businesses and private individuals can continue to protect themselves against them.
In this issue, we report the impact of the COVID-19 global health crisis on US and European loan markets. While the first quarter of 2020 began with strong new loan issuance volumes, the outbreak of the pandemic brought the market to an abrupt halt in both regions. With no reliable timetable as to when commercial activity will normalize, we believe it is critical for investors to focus on debt issuers' abilities to prudently manage cash and financial resources, maintain adequate liquidity and service debt obligations until economies can move into recovery mode.
In the latest issue of our Quarterly Loan Market Commentary, we highlight leveraged loan investors' increasing focus on US loan default rates as fears of the next recession linger. But as long as default rates remain range bound and well spread across multiple industries, could the US expansion have further to run?
Offense is the new defense
Against a challenging backdrop of low growth and geopolitical uncertainty, we believe “offense is the new defense” in private markets investing. We seek opportunities to build resilience instead of buying it by focusing on assets with value creation potential in sub-sectors with above-average growth rates.
In our Quarterly Loan Market Commentary, we highlight the rising trend for loan market investors to adopt a bifurcated approach to credit risk across their portfolio. In search of both higher yield and reduced credit risk, many investors are supplementing higher yielding, lower rated loans with lower yielding, higher rated loans. Could the bifurcated approach be a prudent way to prepare for the next credit downturn?
How to build an effective board
As former CEOs and current portfolio company board members, Christoph Rubeli and Christian Unger know a thing or two about corporate governance. Today, they lead the Operating Directors & Entrepreneurial Governance business unit at Partners Group, which has been tasked with unlocking the full potential of private markets governance across the firm’s portfolio. In a Q&A, they share with us their insights into what makes an effective board and how and why you should evaluate board performance.
The current state of the leveraged loan market
In this White Paper, Partners Group analyzes the growth in the leveraged loan market and looks at how credit conditions have changed in recent years. Our conclusion is that while growth has been rapid in the leveraged loan market and certain credit metrics have weakened, there is no resemblance to the 2008 subprime market, as some commentators have suggested. Moreover, we see recent market volatility as more of a welcome correction – one that may generate attractive private debt investment opportunities – than a threat.
Entrepreneurial ownership holds the key to private markets outperformance
While our base case economic outlook projects a period of continued modest growth, we are aware that the ride may become bumpier as multiple challenges emerge. In this environment, we believe entrepreneurial ownership and strong value creation skills are the only way to generate outperformance.
The Rise of "Governance Correctness"
This paper provides a practitioner’s perspective on the increasing divergence between the corporate governance regimes of public and private markets and the resulting impact on value creation for investors.
Leveraging the winds of change
As the chances of a deviation from our base case macroeconomic outlook of low but steady growth continue to rise, we are focusing on sectors benefiting from the global megatrends that we believe will continue to generate attractive investment opportunities in the long term. These include digital transformation, new generation living and consumption, and the energy revolution.