Year's biggest IPO warns on ESG investing and digital giants
- Reading The Australian Financial Review
On October 25, UBS and Gold Sachs were bringing GQG to the market in the year's largest IPO. GQG expects the IPO to grow funds in the local market since Pacific Current Group is their original backer, and AustralianSuper is their first institutional client. Also, deepening the team's alignment with the shareholders is a real competitive weapon in attracting talents into the business. GQG has $115 billion in client assets, valued at $5.91 billion after raising $1.187 billion last week.
With a successful record of picking trends in the fund management market before, Rajiv Jain, the GQG partner, said "classic regime change "will be more significant than many anticipate in a rising interest rate environment. Also, in the coming years, the resources and energy sector is likely to underperform.
Mr Jain said in COVID-19, lots of companies and consumers invested in technology. While the demand is slowing down, some software companies with overinvestment and high valuations will struggle to grow. When interest rates go up and normalise, the classic regime changes will kill many growth shops.
He warned against the underperformance of ESG funds because renewable companies are facing two factors. One is a lack of pricing power with the pressure coming from the cost escalation and the increased costs of raw materials. The other is the valuation of these companies with the assumption of growth without impediments which are highly unlikely.
Although GQG doesn't push companies to adopt their ESG approach or targets, they prefer companies that are part of the solution, doing it properly in a cleaner way and squeezing out the marginal players. Therefore, they assess company culture and governance at the core of the approach. In the long term, GQG believes those companies with truly sustainable and robust company governance and management.
