Desalination: An Investor’s Niche Interest
On a daily basis, BHA research analysts hear from a variety of investors that are striving to find quality, blue-chip managers that operate core alternative investment strategies. Such strategies include long-short equity, global macro, and credit in the hedge fund space, as well as buyout, venture capital, and distressed in the private equity space. However, every so often an investor mentions a unique, niche interest that is outside the box.
This was the case recently. During an in-depth conversation with a portfolio strategist at a large wealth advisory firm, a BHA analyst learned of his and the firm’s interest in entirely green venture-capital funds that focus on alternative forms of clean energy and clean technology. More specifically, he and the firm are interested in solar power and solar technology. But their niche interest is desalination.
What makes this mandate even more intriguing is that the investor is interested in green funds and opportunities that will directly benefit the military community and military families. Because this search is so focused and unique, the firm is willing to consider new management teams as well as more experienced ones. It is also flexible in regards to funds’ target size.
Many experts believe that within the next 50 years, there will be a great shortage of drinkable, fresh water. As a result, there has been growing interest in finding alternative methods to produce and provide Earth’s various populations with fresh drinking water.
Investors that are interested in or aware of this effort have realized that it is a long-term investment opportunity; it could be years before research and development endeavors come to fruition. Nevertheless, investors will not wait to seek out relevant fund managers or make direct investments in venture capital funds to take advantage of these opportunities.
It is important to note that this particular firm has a history of focusing on unique opportunities. The firm originated as an insurance provider for military officers who were unable to acquire insurance coverage because they were seen as too high of a risk. Throughout the past 90 years, the firm has grown and expanded into a multifaceted financial services firm, however, it has never strayed from its roots: catering to the military community and its families. It intends to continue to do so, even though today the firm is striving to create a corporate culture that is much more energy conscious and retool its infrastructure and operations to be energy efficient and green.
Investors and fund managers alike want to be aware of the general tendencies of investors in core, mainstream areas of the alternative investment space. However, learning of investors’ niche and unique interests is equally important and insightful, as they can shed light on new and emerging areas of focus. They also prove that the industry will always grow and morph as investors’ interests mature and change with the times. As new interests arise, so, too, will new, specialized funds that offer investors untapped opportunities to profit from.