APG seeks partners for asset owner-led infrastructure fund
APG Asset Management is seeking strategic partnerships to amplify its impact in the infrastructure space, through its asset owner-led co-investment fund.
It is responsible for the $606-billion (€569 billion) portfolio of Stichting Pensioenfonds ABP (ABP), the largest pension fund in the Netherlands.
“Collaboration is in the DNA of APG,” Genio van der Schaft, chief operating officer at APG investments Asia & global lead for asset owner partnering, told AsianInvestor.
APG
The asset owner co-investment fund's primary objective is to provide exposure to global non-listed infrastructure investments across various asset styles, sectors, and regions over a long-term horizon.
“The expected returns for infrastructure continue to be relatively attractive and provide a diversification benefit for our main client ABP,” Patrick Kanters, CIO, private investments at APG Asset Management, told AsianInvestor.
A key objective of ABP is the desire to contribute to the global energy transition, and infrastructure assets have the ability to directly contribute to this pursuit while capitalising on responsible investing and circularity mega trends, said Kanters.
“ABP quite recently increased its asset allocation to the infrastructure asset class from 4% of total AUM to 7% this year — that leaves us with quite solid dry powder to invest going forward,” he said.
The asset owner fund invests through direct company structures and large stakes, which allows APG to exert significant influence over project standards and responsible investing practices, in line with ABP’s objectives.
"Because we have large stakes in these companies, in these structures, you can truly influence matters, what assets will be bought, what standards will be used in responsible investing, and we are truly an active investor in these stakes."
ALIGNING OBJECTIVES
APG takes a selective approach, focused on partnering with like-minded investors with a long-term perspective.
APG
“Our focus is on working with partners who are committed to responsible investing. Our client, ABP, expects us to continuously improve our standards, and we seek others who share this commitment and believe in achieving good returns,” said Kanters.
“We do not aim to operate as a commercial fund manager. Our goal is to enhance the investments we manage on behalf of ABP. We will not be doing any transactions solely for the sake of forming asset owner partners. Essentially all transactions mean they are benefitting from the work being done for existing clients.”
Collaboration with like-minded asset owners is crucial in sectors like infrastructure, where transaction sizes are very large. By pooling resources with others, APG can gain access to larger transactions and exert more influence, ultimately benefiting both parties and strengthening its offerings to ABP.
APG has already announced partnerships with several prominent asset owners, including Japan’s Government Pension Investment Fund (GPIF), Korea’s National Pension Service (NPS), and New Zealand’s Superannuation Fund.
"We have already worked with NPS on a transaction we executed in infrastructure, and also in real estate. We also have a partnership agreement with New Zealand Super and a few other things cooking at the moment," Kanters hinted at the growing network of collaborators.
LOCAL EXPERTISE
APG's infrastructure interests span renewable energy, digital infrastructure, and transportation across various geographies.
"The sectors that we primarily focus on in partnering are renewable energy: solar farms, wind farms, battery storage. Digital infrastructure: improving connectivity and also transportation. Think about EV-charging networks," Kanters said.
While APG sees opportunities across regions, Kanters acknowledged the potential for an even larger investable universe and impact in emerging markets.
"We focus on all different regions. We also focus on more greenfields and brownfield assets. So developing new assets will be even more important, of course, in emerging markets," he added.
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Kanters stressed the importance of having a local presence and direct relationships with partners, particularly in private investments.
APG's offices in Hong Kong and Singapore allow the firm to be close to the action, understand local cultures, and structure effective partnerships.
"It's not only for private investments, it's crucial to be close to where the action is, to be in the same time zone, to have direct relationships with partners, because we typically do not invest through funds," Kanters explained.
"You need to be on the ground through offices, like we have in Hong Kong and Singapore. You need to have the local culture on board, speak the language."