Wednesday, September 9, 2009

HedgeWeek Interview: " Bernard Lambilliotte, Ecofin: "We expect explosive development in China's renewable energy sectors'"

Originally published August 18, 2009. Here's the three month chart for the Shanghai composite index:
Chart for SSE Composite Index (000001.SS)

From HedgeWeek:
Bernard Lambilliotte, chief investment officer of specialist utilities and infrastructure investor Ecofin, says the firm's newly-launched China Power & Infrastructure Fund is well poised to capitalise on the growth opportunities arising from China's USD586bn stimulus spending, much of which is being directed toward the infrastructure and energy space.

GFM: What is the background to your company and fund?

BL: Ecofin is a leading specialist in the utilities and infrastructure sectors worldwide, managing over USD3bn across a range of hedge funds, long-only funds and mandates, and invests through both public equities and private situations. The firm has a global team of 25 utility specialists, four of whom specialise in China. Ecofin was founded in 1992 and has offices in London, New York, Hong Kong and Geneva.

The Ecofin China Power & Infrastructure Fund is the latest addition to Ecofin's global utilities investment platform. The fund pursues a long-biased long/short equity strategy and focuses on investment in large-cap, liquid public equities. It aims to generate compelling risk-adjusted returns in greater China and capitalise on the long-term growth potential in China's utility and infrastructure space.

The fund seeks to generate absolute returns through dynamic portfolio construction and sector allocation based on macro and fundamental research. The fund was launched on July 1 with a starting capital of USD63m. Before the launch, Ecofin was already investing some of its assets in China though its global funds....

...FM: How has your recent performance compared with your expectations and track record?

BL: The existing investments in China within the global hedge fund portfolio have delivered performance for the year to date more than 10 per cent higher than the broader Chinese market performance, but with 70 per cent of the volatility. Going forward we expect the fund to continue to produce superior risk-adjusted returns.

GFM: What opportunities are you looking at right now?

BL: The majority of China's ongoing USD586bn stimulus spending will go into the infrastructure and energy space, which accelerates long-term growth and also provides catalysts and dispersion among the sub-sectors.

GFM: What events do you anticipate in your sector in the year ahead?

BL: We will continue to witness the growth effect generated by China's stimulus spending efforts. We expect to see further market liberalisation of many-heavily regulated sectors, and tariff reforms as lower commodity prices and an inflationary environment create good conditions for a smoother transition to a more market-driven system.

Furthermore, we expect explosive development in the renewable energy sectors. The new renewable energy development targets that the government is setting will drive China's domestic investment in the sector, while at the same time global demand will provide huge opportunities for China's low-cost equipment manufacturers....MORE