Ecofin Global Utilities and Infrastructure Trust Plc · LSE:EGL
Ecofin Global Utilities and Infrastructure Trust — Marten & Co webinar 26 May 2021
30 slides from Ecofin Global Utilities and Infrastructure Trust's conference presentation, May 26, 2021
Slide 1: Ecofin Global Utilities and Infrastructure Trust plc
Ecofin Global Utilities and Infrastructure Trust plc Marten & Co webinar 26 May 2021 © 2021 Ecofin
Slide 2: EGL's Portfolio Manager
EGL’s Portfolio Manager Jean-Hugues de Lamaze Managing Director, Ecofin Advisors Limited 2021 Awards Portfolio Manager, Ecofin Global Utilities and Infrastructure Trust plc BEST ESG INVESTMENT and the Tortoise Sustainable Listed Infrastructure UCITS Fund FUND: INFRASTRUCTURE Runner-up: Ecofin Adviso
Slide 3: Strategy overview
Strategy overview An alternative income strategy featuring capital preservation and exposure to global growth Global Income Growth Diversified with respect to geography, Invested in securities which Growth-oriented infrastructure sub-sector and investment themes produce a yield businesses and utilit
Slide 4: Characteristics of the investment universe
Characteristics of the investment universe Economic infrastructure offers unique characteristics that make it an attractive asset class for investors Core assets respond to Low volatility and essential needs Defensive asset class low beta Asset-backed services Competitive Strong cash flow environmen
Slide 5: Why now?
Why now? We are incrementally positive on the outlook for listed infrastructure: Renewables growth 1. Renewables economics continue to improve, and in 2020 wind and solar further consolidated their position acceleration driven as the cheapest sources of electricity globally. At the same time, climat
Slide 6: Why now: Infrastructure capex and energy transition underpin profitable growth (1)
1. Why now: Infrastructure capex and energy transition underpin profitable growth (1) Infrastructure globally requires a major step up in investment as a significant proportion is obsolete, in poor condition or inadequate to cope with the rapid development of renewable energies The world today inves
Slide 7: Why now: Infrastructure capex and energy transition underpin profitable growth (2)
1. Why now: Infrastructure capex and energy transition underpin profitable growth (2) Renewables economics underpin an acceleration in capacity installations globally… Renewables are now cheaper than fossil fuels - and costs continue to fall* $41/MWh $30/MWh $28/MWh $29/MWh $28/MWh $26/MWh Falling S
Slide 8: Why now: Infrastructure capex and energy transition underpin profitable growth (3)
1. Why now: Infrastructure capex and energy transition underpin profitable growth (3) These estimates will prove to be too conservative; net zero emissions targets by 2050 will require significantly faster adoption of renewables Climate emergency tops the newly elected European Commission leadership
Slide 9: Why now: Evolving business mixes will drive value creation (1)
2. Why now: Evolving business mixes will drive value creation (1) Utilities are rapidly adapting business models to a world which increasingly prioritises decarbonisation… EBITDA split by activity for European Utilities 12% 13% 11% 21% 22% 10% 7% 12% 29% 42% 44% 49% 46% 37% 30% 30% 34% 33% 7% 12% 20
Slide 10: Why now: Evolving business mixes will drive value creation (2)
2. Why now: Evolving business mixes will drive value creation (2) Adding value by investing in companies “in transition” Companies “in transition” are firms on the verge of substantial improvements in their growth trajectory and ESG profile, driven predominantly by directional shifts in capital allo
Slide 11: Why now: Transportation infrastructure offers gearing to economic recovery
3. Why now: Transportation infrastructure offers gearing to economic recovery In terms of fundamentals, transport infrastructure stocks are heading into the post-COVID recovery as one of the sectors worst affected by the pandemic. During the course of 2020, transport infrastructure stocks suffered n
Slide 12: A portfolio with resilient earnings and attractive growth
A portfolio with resilient earnings and attractive growth EGL’s portfolio weathered the pandemic relatively well, compared to both the market and listed infrastructure as a whole, displaying significant earnings resilience in highly uncertain times. Notwithstanding its defensive nature, the portfoli
Slide 13: Valuation opportunity: 30-year lows vs bonds
Valuation opportunity: 30-year lows vs bonds Listed infrastructure dividend yields are attractive U.S. regulated utilities are attractive compared vs government bond yields to corporate bonds Source: Bloomberg 13
Slide 14: Valuation opportunity: discount to equity markets
Valuation opportunity: discount to equity markets Utilities’ valuations are now c. 10% cheaper than pre-COVID, while the market has become c. 15% more expensive EGL has re-rated only modestly relative to the market and global infrastructure index (2FY EV/EBITDA) Source: Bloomberg 14
Slide 15: Listed European airports valuation vs M&A
5 15 20 25 30 10 AdR-2000 Sydney-2002 Brussels-2004 TBI-2004 bidders Copenhagen-2005 Budapest-2005 Source: Exane BAA-2006 London City-2006 Exeter-2007 Budapest-2007 Gatwick-2009 M&A average = 16x Melbourne Airport-2010 Listed average = 12x Changi Airport-2010 Naples Airport-2011 Copenhagen-2011 Brus
Slide 16: Performance (to 30 April 2021)
Performance (to 30 April 2021) Since Since (total return in £) 1M% 3M% 6M% 1 Yr % 3 Yrs % admission Admission1 % % p.a. EGL NAV 2.4 1.7 15.0 29.2 52.8 62.0 11.0 EGL Share price 3.4 0.3 15.8 23.0 72.8 105.1 16.9 S&P Global Infrastructure Index 3.1 7.9 15.4 17.2 15.5 19.0 3.8 MSCI World Utilities Inde
Slide 17: Portfolio profile (30 April 2021)
Portfolio profile (30 April 2021) By geography (% of portfolio) 10 Largest holdings Country % of portfolio 6% NextEra Energy1 US 5.4 7% North America Iberdrola Spain 5.4 38% Enel Italy 4.5 11% Europe RWE Germany 3.6 UK SSE UK 3.4 Emerging Markets EDP Portugal 3.2 Other OECD Edison International US 3
Slide 18: Responsible investing
Responsible investing Virtuous circle of active Primary: investment in public markets Target most efficient companies Base-line moves up Secondary: Cleaner companies become even cleaner Research • Focus on sustainability is driven by belief that companies with a thorough understanding of and strateg
Slide 19: ESG analysis is fundamental: avoiding pitfalls
ESG analysis is fundamental: avoiding pitfalls • Unlike most ESG mandates, EGL does not adopt ex-ante exclusion criteria on its investment universe • Instead, we screen prospective investment ideas through multiple ESG criteria to identify potential risks and are comfortable to side-step consensus s
Slide 20: Carbon performance
Carbon performance Emissions performance of EGL’s portfolio (by Ecofin Advisors Limited with CarbonAnalytics) • Electricity generators in EGL’s portfolio generally have CO2 emissions which are significantly below the average emissions of their relevant electricity grid and the companies sitting in t
Slide 21: Summary
Summary • Infrastructure assets are essential for society and economic growth • Investment in sustainable economic infrastructure must be accelerated; the UN’s Sustainable Development Goals, Europe’s Green Deal and the US’s stimulus plans will be propellants • Cash flows are healthy and more predict
Slide 22: Appendices
ecofin Appendices 22
Slide 23: Investment team
Investment team STRATEGY INVESTMENTTEAM RISK Jean-Hugues de Lamaze Matteo Rodolfo Gilles Schlutig Managing Director, Senior Portfolio Manager Investment Analyst Head of risk – Listed Ecofin 31 years experience 4 years experience strategies Joined Ecofin 2008 18 years experience • Co-founder and CIO
Slide 24: Listed infrastructure universe (by GICS)
Listed infrastructure universe (by GICS*) By GICS sector classifications: North Pan- Other Emerging Total America Europe Developed Markets Criteria: • Current market cap. > $500mn No. of companies 127 102 49 96 374 • Average daily value traded > $1mn Market cap. ($ ‘000) 1,750 896 233 501 3,380 Univ
Slide 25: Investment process
Investment process TOP-DOWN Geographical and sector positioning • Regulatory regimes and trends; government energy policies • Energy commodity prices • Industry capex trends • Interest rates and credit market conditions PORTFOLIO • Position size determined by risk/reward assessment • Scenario analys
Slide 26: Investment process
Investment process Qualitative analysis Quantitative analysis Relative value analysis Proprietary modelling of earnings Company strategy and growth prospects and cash flows Peer analysis Business model and risk assessment Balance sheet strength and credit DCF, regulated asset base and rating multipl
Slide 27: Supportive upward trend in commodity prices
Supportive upward trend in commodity prices NAT. UK GAS COAL GERM. US (PJM CO2 region) 27
Slide 28: Contact details
Contact details Ecofin Advisors Limited Burdett House 15 Buckingham Street London WC2N 6DU United Kingdom Tel: +44 20 7451 2929 Elspeth Dick, CFA Michael Hart Investor Relations Marketing +44 20 7451 2921 +44 20 7451 3023 edick@ecofininvest.com mhart@ecofininvest.com 28
Slide 29: Disclaimer
Disclaimer This document is being issued in relation to Ecofin Global Utilities and Infrastructure Trust plc (“Ecofin Global”) by Ecofin Advisors Limited (the “Investment Manager”) which is authorised and regulated by the Financial Conduct Authority. This document does not constitute or form part of
Slide 30: www.ecofininvest.com
www.ecofininvest.com
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