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INFRASTRUCTURE UPDATE: Quaero Infrastructure Securities strategy flies with Airport holdings

Returns from Quaero Capital’s Infrastructure Securities strategy have taken off after the manager backed Europe’s outperforming airports.

The Airports sector was up by over 10% in the last month. Spanish operator Aena was up 11%, and is up 30% year to date (YTD). There may be further upside due to the excellent prospects for capacity growth which is expected to continue at a 9% annual rate for the rest of the year.

Additionally, growth from the acquisition of further concessions should provide further upside. Aena can raise long term debt at less than 1%, so the firm’s any expansion should be easily financeable. There is also a distinct possibility for an increase in the dividend.

Another airport stock, Flughafen Zurich, was up 9.5% (although it has subsequently corrected), and is up 23% YTD. Estimated passenger growth at the airport is second only to Aena in Europe, at 4.8%, and likewise additional concessions represent upside: Brazil is a possibility. The Quaero strategy does not own Aeroports de Paris or Frankfort Airport Services. Both are up about 33% YTD, but questions remain over the growth prospects for these stocks.

Elsewhere, the Wireless infrastructure sector is thriving. The large cap tower company Crown Castle was up 7.5% on growth expectations for Funds from Operations of 13% in 2017. American Tower, also a large cap firm, was up 4.2% as it continued to experience strong organic growth in revenues across its regions. Like Crown Castle, it expects 13% growth in Funds from Operations in 2017.

The strategy’s holdings in Electricity Transmission and Distribution gained 9% thanks to Enel, which reported Q1 net income up 19% year-on-year, helped by a decline in financial expenses and better than expected Latin American performance, offset by declining generation margins in the Iberian Peninsula.

Electricity Generation was up 4.6%, driven by Spain’s Iberdrola. It announced the proposed merger of its two Brazilian businesses to create the largest energy company in Brazil, with activities including power generation (including renewables), transmission, distribution and supply. Iberdrola will hold a 52.5% stake in the new company, Neoenergia Group. The benefits of the merger are expected to bring synergies of 5-7% on the EBITDA level, and an increase of EPS to the whole group in the low single digits.

A report from The Transition Pathway Initiative, a coalition of investment funds with $4.5 trillion of assets under management, has found that European utilities such as Iberdrola, Enel and SSE of the UK are making more progress than US peers in shrinking carbon footprints.

The report covered the largest 20 electricity producers by market cap. It concluded that there are long-term risks for US power groups, and that it would be an error for US groups to take the US Administration’s withdrawal from the Paris agreement as a signal to halt the shift to cleaner energy sources.

Although the move by US President Donald Trump was ‘disruptive’, the report said, the strategic decisions faced by major power utilities have a longer time frame than his presidency. The Real Assets strategy does not see any long-term value in the US electricity generation sector at present, preferring instead to invest in Europe’s Enel, Energias de Portugal and Iberdrola, as well as Australia’s AGL Energy.

The Infrastructure Securities strategy is now 97% focused on infrastructure stocks with a 3% cash provision. The largest exposures are to the diversified infrastructure companies (16.4%), toll roads and tunnels (16.1%) and rail & bus (15.3%).


Notes to Editors

About Quaero Capital

Quaero Capital is an independent, specialist fund management firm which brings together independently minded investment managers who use original research to provide highly actively managed strategies for clients in the institutional and wholesale markets. Quaero Capital was founded in 2005 in Geneva as “Argos Investment Managers S.A." It is a 100% employee-owned company with its founding partners taking an active role in its investment processes. The firm is a team of 32 individuals including 16 experienced investors who enjoy working in an investment focused environment. Quaero Capital is regulated by the FINMA, the Swiss Financial Markets Authority. It offers a range of high conviction investment strategies spread across 12 funds in two Luxembourg SICAVs (a Part I-UCITS and a Part II).

If you would like more information about the Quaero Infrastructure Securities strategy, please go to

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