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Private Markets Quarterly Investor Letter

19 February 2019

 

PORTFOLIO ACTIVITIES AND OUTLOOK

In Q4 we subscribed to the AMP Capital Global Infrastructure Fund II. AMP is a very experienced infrastructure specialist that manages a value-add fund: additional value is added with active asset management including adding and expanding assets. This closed-end fund already has four investments in its portfolio, as a result of which directly 68% of the commitment issued by us has been requested and invested. With this investment, we are further expanding our infrastructure portfolio consisting of the open-end fund of J.P. Morgan and a direct co-investment in a wind farm project.

The return for the fourth quarter was +0.2%, mainly due to the open-end investments in infrastructure (J.P. Morgan) and real estate (Clarion Gables). Both these funds reported a positive income and a positive revaluation of the intrinsic value of the underlying assets in their portfolios. Given the long-term nature of most investments in the Kempen Private Markets Fund, the real return potential will only become visible after a few years.
  In the overview below, we show the portfolio at the end of December 2018 based on the committed capital. At present, we are committing more capital to Infrastructure compared to Land and Real Estate. We expect to make additional allocations to the latter categories in the coming quarters, as a result of which the allocation differences will decrease. The pipeline of investments is well filled: we expect to introduce new partnerships within Land and Real Estate and make additional investments within Private Equity and Infrastructure in the coming quarters.

EUR 66 MLN COMMITTED CAPITAL  

As at December 2019

Source: Kempen Capital management, 31 December 2018

Most important portfolio developments

Forbion (Forbion Capital Fund IV) completed two investments in the last quarter, bringing the number of companies it invests in at three. This includes Omeicos Therapeutics, an organization that was looking for funding for the development of drugs against cardiovascular diseases. In addition, Forbion invested in Inflazome, that focuses on aging-related diseases such as Alzheimer’s and Parkinson’s. The capital investment in these companies will take place in phases.

Ciclad (Ciclad VI) has completed two new investments in the fourth quarter. This means that a total of seven investments have already been made. An eighth investment is on the roll for the coming quarter, as a result of which the fund will have invested approximately 40% of the total capital.

Steadfast (Steadfast Capital Fund IV) has finally closed its fundraising and collected almost 300 million euros. Steadfast also announced its first investment in Fahrzeugbau Kempf, a German industrial company specializing in the development and production of customised dump trucks for logistics, construction and agricultural sectors.

Westbridge (WestBridge SME Fund II) is in the process of completing two new investments for which it has acquired exclusivity. We have been closely involved in the due diligence of both new investments and are positive about the growth expectations of these interesting companies.

J.P. Morgan (J.P. Morgan Global Infrastructure Investment Fund) completed two new platform acquisitions. The first is North Sea Midstream Partners, that focuses on the development and operations of large midstream oil and gas infrastructure in the North Sea area. In addition, J.P. Morgan participated with Vestas in an onshore wind farm in northern France. Various existing platform assets of J.P. Morgan also acquired new infrastructure assets.

AMP (AMP Global Infrastructure Fund II) has already called a significant share of the committed capital and we now participate with that in four assets spread across the US and the UK. AMP has shown a good pace of investment since the fund launch and also has a well-filled pipeline for the coming quarters.

Craigmore (Craigmore Permanent Crop Partnership) completed a new acquisition in the Gisborne region on the North Island of New Zealand in the fourth quarter. Craigmore received permission from the OIO (Overseas Investment Office) for the purchase of 59 hectares of agricultural land. Craigmore will use approximately 42 hectares to develop a new apple orchard.

Clarion Gables (Clarion Gables Multifamily Trust) sees demand/supply ratios in the housing market in the south of the US improving and increased its return forecast for the next two years. In the fourth quarter, a development project for a new apartment complex in Dallas was completed and is now fully operational (i.e. > 90% let). Gables has a well-filled development portfolio (around 20% of the portfolio) with eleven projects that will be realized in the next three years.

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2019, 19 February

Private Markets - Quarterly Investor Letter Q4

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Disclaimer

Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorized as a management company and regulated by the Dutch regulator Autoriteit Financiële Markten. The Sub-Fund is registered under the licence of KCM at the Autoriteit Financiële Markten and not subject to Luxembourg supervision. The shares of the Sub-Fund are admitted for (public) offering in the Netherlands, the UK, France and Switzerland. The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (only for the Netherlands) and the prospectus. These documents of the Fund are available on the website of Kempen.

The Sub-Fund may have investments in financial instruments mentioned in this document and it may at any time decide to execute buy or sell transactions in these financial instruments. The views expressed in this document may be subject to change at any given time, without prior notice. The information in this document not intended and should not be considered as research, an investment recommendation or as an offer and provides insufficient information for an investment decision.

Although the contents of this document have been compiled with the utmost care, and are based on reliable sources of information, no guarantee or warranty is given and no liability is accepted, express or implied, regarding the completeness or accuracy of the contents.

 

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