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In January, the Partners Group Listed Investments SICAV – Listed Infrastructure continued its strong performance from last year in line with the global equity markets. Supported by the signing of the “Phase 1” trade deal between the US and China, railroads, ports and certain toll roads developed well. However, the performance slightly weakened in the latter half of January with the spread of Coronavirus. Consequently, the Chinese and other Asian equity markets performed negatively, though the equity markets in the developed world recorded a strong performance. Meanwhile, the UK remained one of the strongest contributing regions in the portfolio, as utilities and social infrastructure companies benefitted from rising political certainty after the elections in December last year.

Last year’s top performer Cellnex continued to increase in value this month. The Spanish tower company announced a deal to acquire tower assets in Portugal from OMTEL. In addition, the company raised more debt in 2019 at attractive rates in order to finance its large M&A pipeline.

Elsewhere, Beijing Capital International Airport (BCIA) decreased in value. While airports overall had a weak month mainly driven by the spread of the Coronavirus and with many companies cancelling visits of their employees to China and Hong Kong, BCIA was hit particularly hard as it is mainly exposed to Chinese airlines.

Finally, Italgas, the Italian gas distribution utility has started the year on a strong note as it won a gas service contract, which is servicing a total of 20k end users. The company further announced that it will invest EUR 100m in the service area. Additionally, the relative regulatory stability as compared to its European peers has been especially beneficial for Italgas.

In February, the Partners Group Listed Investments SICAV – Listed Infrastructure decreased in value in line with broader equity markets which took a significant hit in the last week of the month, as fears of the spread of the coronavirus had an overwhelming effect on the sentiment. While it has been a volatile month for broader equity markets, the Fund offered more stability in comparison, as stable sectors such as towers and social infrastructure supported the performance. Additionally, the US Fed announced a further interest rate cut in order to support the falling market and restore some confidence.

The best performing company this month was American Tower. The company reported robust results for the financial year of 2019 with strong growth in leasing activity, healthy growth in cash flows, and a guidance for 2020 that was in-line with estimates. American Tower further informed that it was experiencing less churn in its Indian operations and signaling profitable growth in the country in the near term.

However, West Japan Railways decreased in value as Japan reported a multi-fold increase in the coronavirus cases, which affected rail passenger numbers meaningfully. Furthermore, the Japanese economy was on the brink of a recession after it reported weak Q3 numbers.

While the airport sector was overall weak, Malaysia Airports bucked the trend with strong reported earnings for the last year. During 2019, EBITDA increased by 9.3% and 20 foreign airlines and 64 international city pairs grew by double digits over the previous year, indicating continuing appetite for international travel in the country.

In March, the Partners Group Listed Investments SICAV – Listed Infrastructure continued to decrease in value, while the global equity markets turned very volatile and reported one of the weakest months in over a decade. As the Coronavirus spread to other European nations and to the US, it led to mass lockdowns, supplementing the restrictions on air travel. The Listed Infrastructure portfolio posted a negative performance, though it remains ahead of the broader equity markets on a YTD basis. Toll roads were amongst the weakest sectors, seeing a decline in traffic of passenger vehicles. During this volatile month, the Fund benefited from its exposure to stable sectors such as social infrastructure, towers and the regulated T&D, which provided support to the performance.

Airports continued to suffer for a second month in a row as passengers declined further. Atlantia was the worst performer, as virus cases in Italy continued to rise and the company was negatively affected by its exposure to the Rome Airports. Fraport and ADP also witnessed significant declines in passengers, and both airport operators proceeded to suspend or cut the dividend this year. While we do not anticipate an immediate recovery, we remain confident that these are essential assets and passengers will return to the pre-crisis levels over the next few years. At the same time, Sabesp, the Brazilian water company declined in value during the reporting period as Brazilian ministers announced that a potential privatisation of the company will be delayed as current market conditions are weak. Additionally, Sabesp also announced a tariff ‘holiday’ to provide relief to its customers for a few months, as the country prepared itself to deal with the virus.

A positive performer this month was BBGI, the UK-based social infrastructure operator. It increased in value while most of the portfolio declined, since the company has revenue visibility for as long as 40 years. BBGI benefits from revenues which are based on availability of infrastructure, rather than volume or demand. Additionally, the company posted FY 2019 results, which remained robust.

Sources: Partners Group AG

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