Johan Groothaert

Why would investors ignore "most of the world", especially if most of the world encompassed some of the most dynamic, high growth markets? This point was at the crux of my recent interview with Richard Lowe at Investment & Pensions Europe (IPE) Real Assets. At Actis, we are one of the world's leading investors in growth market sustainable infrastructure. The need for new electricity is really massive in that part of the world. There can be an element of energy transition like in Western markets but the key difference is that these markets really need energy addition. This means building new things, new capacity, new energy. Having that background of building, operating, managing power businesses and bringing it into the investment space – like an industrialist becoming an investor – I think this is something that just makes Actis different. Of course, we are financial engineers, in that we are investors, but we also are actual engineers. We build infrastructure. https://lnkd.in/dKsxtWpW #InfrastructureInvesting #SustainableInfrastructure #SustainableInvesting

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There are interesting things happening in the Lithuanian bond market, and I wanted to explore some of them below. One of the attractive features of bond instruments is a fixed term, with a known maturity date, which allows you to predict the cashflows of your portfolio quite well, with a set coupon and bond repayment dates in mind. If the alternative financing is needed longer than expected, the usual way is to refinance this debt with a new bond issue, where the existing bondholders are asked to change their bonds into new ones being issued. An ongoing example of this is Urban HUB bonds currently being distributed, where existing bondholders can change their 10.75% coupon bonds into 8.5% yielding bonds. Nevertheless, we are observing in the market some examples of the extension of the bond term dates, where the maturity is brought forward to the future, due to the projects or bank financing not being finalized on time 🤓 A recent example of this is UAB “Metanira” bonds, which were issued to finance a residential development in Gandia, in the Valencia region of Spain, EUR 5.9 M in total. The bonds were initially issued with a 10% coupon rate with a maturity date commencing on the 5th of Sep 2025. At a recent bondholders’ meeting, the issuer offered to extend the maturity date to the 5th of March 2026 and to add a 2% premium to the last coupon payment. Another example is the ongoing saga of UAB “Orkela”, where the bonds were issued to finance st Jacobs’ commercial development in Vilnius. The programme was distributed in tranches, initially starting with 6% coupon and reaching 10% yield at the peak of EUR 38.66 M distribution programme, over the period of 2022 – 2024. In Jan 2025, the bondholders of Orkela were asked to vote to extend the terms of the bonds to July 2025, with the issuer offering 8% yield. In July 2025, the bondholders were subsequently asked to vote 2nd time to extend the issue to Oct 2025, with the issuer offering 9% yield. The 19th of October deadline is coming up, and it will be interesting to see whether the maturity date of these bonds will be further extended, the 3rd time. In my humble opinion – yes, as although the issuer is negotiating bank financing with the banks to refinance the bond debt, due to the nature of the largest tenants in the complex, which are a school and a hotel (which is yet to open), the banks might want to wait to see the revenue metrics of these tenants, and thus delay their financing decisions. This is not to say that these bonds will never be refinanced with traditional debt, only that it might take longer than expected due to the conservative profile of the banks. And if the outcome is, indeed, positive sooner, I think both the issuer and the bondholders will be happy and relieved, as the refinancing of large bond issues is never easy 🙏

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China has been guiding the daily FX fix stronger lately. Popular explanations - (1) creating room for future deval; and (2) relying on more FX for trade rebalancing – can lead to very different outcomes for EMFX though, especially higher-beta currencies

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𝗛𝗲𝗱𝗴𝗶𝗻𝗴 𝗹𝗼𝗼𝗸𝘀 𝗲𝗮𝘀𝘆 – 𝘂𝗻𝘁𝗶𝗹 𝗶𝘁 𝗶𝘀𝗻’𝘁. On paper, it’s simple: You’ve got an asset. There’s a risk you want to neutralise (or are required to because of regulation). So you slap on a hedge – probably a derivative – and call it a day. Sorted, right? Let’s take a common one: You’re managing a USD equity portfolio worth $100 million. Your base currency is SGD (becasue you are a Singapore based Instiution). So now you're long USD equities 𝘢𝘯𝘥 long USD vs SGD. To hedge the FX, you sell USDSGD forward – usually on a 3-month roll via FX swaps. In theory, your hedge notional tracks the portfolio's USD market value. Start at $100m. Three months later it’s $103m? You update the hedge. But theory starts to wobble when: • The hedge isn’t marked properly • MTM swings are ignored • Entry cost gets confused with full-cycle P&L • The hedge gets treated like a standalone trade instead of protection I’ve seen PMs brag they “saved 8bps” by waiting for a tighter spread – unhedged for days in the process. Legged, exposed, and completely missing the point. They celebrated a cheaper entry... while the hedge P&L was quietly flapping in the breeze. Then there's the  confusion betweern 𝘵𝘳𝘢𝘥𝘪𝘯𝘨 and 𝘩𝘦𝘥𝘨𝘪𝘯𝘨. The moment your hedge isn't in place – your're trading , not hedging. Fine if you are a prop trader. Bit of a problem if that is not your mandate. Now that’s before we even talk about 𝘮𝘢𝘯𝘢𝘨𝘪𝘯𝘨 the hedge mid-cycle: Taking profits. Restructuring. Exploring options or hybrids. You know… optimising. Outside a bank market makers trading book, most hedges are treated like fire extinguishers – set and forgotten until something explodes. That’s risky enough in FX. But with long-dated interest rate swaps? It can be a slow-motion disaster – especially for insurers who think “set and forget” is a strategy. But a good hedge doesn’t just sit there. It earns its keep. 💬 What’s the worst hedge mistake you’ve seen (or made)? No judgment – only stories. #mikeduncan #ParaBellumAdvisors #ᴍᴀᴋᴇitʜᴀᴩᴩᴇɴ #FXHedging #Derivatives #Hedging #RiskManagement #CapitalMarkets #Structuring   #LBFalumni #SkyHighTower🚀

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When everything’s working, it’s time to question the setup. H1 2025 has been unusually kind. Equities rallied. Gold surged. Bitcoin bounced. Every risk asset worked. Is this liquidity rotation? UK gilt yields broke 2022 panic highs. French 30-year yields touched 4.21%. With fixed income not working, money seems to be flowing elsewhere. The numbers are telling: - US market cap-to-GDP: 208% - India: 127% Both well above the “modestly overvalued” threshold. Meanwhile, the “TACO trade”, Trump Always Chickens Out, has gone mainstream. Every tariff threat gets bought. But tariff rates just hit 13.4%, the highest since the 1940s. The real impact may not show up in the data for months. At Prudent Investment Managers, we’ve raised cash levels and are extremely cautious about new deployments. Not because we expect a crash, but because the risk-reward has shifted. Sometimes, the hardest decision is to resist your temptation to invest. And sometimes, it’s the most rational one.

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The gold price increased by 6.3% last week – extending its upward trend – as investment flows continued helped by ITM options at expiration and overall positive momentum: https://lnkd.in/eExbz4Mr Uncertainty and rate-cut expectations continue to draw in new investment, even if the rally feels stretched from a technical perspective. As we covered in our blog last week, our analysis suggests that gold remains strategically under owned with investment demand upside. Of course, the high gold price level is posing challenges to investment demand: https://lnkd.in/etqBVCXi Subscribe to our Weekly Markets Monitor on Goldhub.com to receive these updates each week. World Gold Council #gold #investment

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"White-label ETF issuer HANetf has launched Europe’s first physical #uranium exchange traded commodity (ETC) in partnership with @sprott Asset Management. The Sprott Physical Uranium ETC (SPUT) is listed on the London Stock Exchange (LSE) and will be listed on Deutsche Borse in March, with a total expense ratio (TER) of 0.55%" https://lnkd.in/eq5TyT6t

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