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Setting the investment agenda

31.08.2020

Monthly Agenda August 2020 – Alternatives

The integration of ESG into the investment process is becoming a standard part of General Partners (GP) mandates within private markets. The cumulative number of funds with ESG commitments raised between 2015 and H1 2020 now stands at 1,601 with total committed capital of $1.69tn. Private equity, responding to the increasing focus on sustainable investing, are now seeing ESG questionnaires from investors all over the world. Average ESG committed fund sizes also continue to grow with 2020 average fund size $1.4bn vs $900m in 2015.

Chart 10: ESG-Committed private capital fundraising, 2015-2020 YTD

Enlarge Source: Preqin

 

The growth in data infrastructure continues to accelerate with additional tailwinds coming from the shift to online following government imposed lockdowns globally. Demand for cloud storage will continue to balloon, devices that are part of the Internet of Things, the impending 5G wireless networks and the prospect of self-driving vehicles will require considerable spend on infrastructure, particularly in dense urban areas where low latency will be critical to future success.

Chart 11: Number of hyperscale data centres 

Enlarge Source: KKR

 

Iron ore prices recorded their first weekly fall in five weeks as prices stalled on a turnaround in supply from the world’s second largest exporter, Brazil. Prices had soared in recent weeks on the back of robust demand from China, and also supply side issues from the South American nation as it struggled to contain the outbreak of Covid-19. Both BHP and Vale, two of the world’s largest iron ore producers suggested it will be hard to maintain current price levels. The metal is up 41% year to date.

Chart 12: Iron Ore price falls from recent high

Enlarge Source: Bloomberg

 

 

Darragh Kennelly
Investment Analyst

 

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