Summary
The Fund is a co-investment vehicle designed for like-minded investors and asset owners who wish to invest alongside APG Asset Management NV ('APG AM') and its clients. The 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 Fund, structured as a Dutch Limited Partnership, will invest directly or indirectly in infrastructure projects that fulfill specific criteria. These criteria include long-term duration, low volatility, low correlation to other asset classes, involvement in natural monopolies with high entry barriers and limited alternatives, resilience to technological obsolescence, predictable and stable cash flows, preferably linked to inflation, and a strong emphasis on sustainability.
The AOP Fund aims to enable investors to access infrastructure investments that align with their long-term investment goals and risk appetite. The Fund will have one Limited Partner representing the asset owner partner and one General Partner, an APG AM subsidiary responsible for managing the Fund's operations.
The Fund targets the following asset styles:
Group 1: Assets with 'minimal' volatility
Group 2: Assets with 'constrained' volatility
Group 3: Assets with 'relatively high' volatility
A robust framework is used to classify investments based on asset-specific risk factors. The key risk factors that are considered include revenue risk, operational risk, construction/capital expenditure risk, and leverage. Revenue risk is assessed based on price and volume volatility. Contracts, regulation and market volatility are all factors that influence cost and volume risk.
Operational risk is evaluated by looking at the operational expenditure as part of the revenues (EBITDA margin) and how variable this expenditure is. Development capital expenditure is another factor that can impact realized returns, and as such, it is considered when classifying investments.
Finally, the capital structure is taken into account. The greater the ability to service the debt, the lower the expected volatility. The assessment assigns a higher or lower score to each risk factor depending on the magnitude of uncertainty linked to it and the anticipated impact of the risk factor on returns. Specific guidelines have been developed for conducting the assessment and a model for translating them into a group classification/asset style.