Equinix (US)

Equinix is one of the leading data center real estate investment trusts (REITS) globally, with more than 200 data centers and more than 9,800 customers that connect via Equinix locations. This company has a growth profile that has improved year-to-date, with increased remote work and cloud data volumes.

  • Using technologies such as free air-cooling systems, reusing waste heat, ultrasonic humidification, evaporative cooling and low-power servers, energy efficiency is a core focus for the company. Equinix can help customers reduce the carbon footprint of its supply chain — through energy efficiency, but importantly 92% of power used globally by Equinix is sourced from renewable energy sources. All new centers are built to LEED silver building standards.
  • Functionally, a data center REIT provides for network interconnection (for example to allow internet players like Microsoft and AOL to exchange information). Lack of neutrality between these players created the need for independent players. This provides a unique market niche which becomes even more important with the fast growth of these so-called hyperscalers (Google, Microsoft, Amazon) — these big technology companies have their own data centers, but because of their fast growth, they rely in part on so-called colocation providers like Equinix. These large customers are also looking to go carbon-neutral or even carbon-negative, per Microsoft’s recent pledge, making Equinix an aligned partner.
  • With global reach, scale, and steady and reliable growth for 17 years, Equinix has a strong balance sheet, pricing power and built-in business model resilience. Unusually, Equinix also owns the land for around 50% of its data centers, and continues to buy more land assets, which provides insulation from rent pricing. Up to 90% of revenues come from subscription-based services, providing high recurrent revenues. India, Mexico and Africa represent future growth areas.

Evotec (Germany)

Evotec is a global leader in the provision of contract research services, specifically at the pre-clinical trial stage of healthcare research.

  • Evotec has two operating businesses; Execute (80% revenue) the pure fee-for-service business, which has experienced above-market growth of 20% 5Y CAGR since 2015 and Innovate (20% revenue), where Evotec leverages its assets, know-how and market knowledge to create pre-clinical assets to sell to customers for further development. The Innovate division has attractive growth opportunities from milestones and royalties, creating an extremely attractive return profile to grow into.
  • Evotec has a diverse range of more than 800 customers and is technology agnostic, being able to serve customer needs across small molecules, antibodies, biologics, advanced therapies and stem cells. With over 70% of its 4,000 employees holding PhDs, the company is strictly focused on innovation to address unmet healthcare challenges and 100% of the projects it is involved in are either first-in-class or best-in-class molecules.
  • As medical science advances, and pathophysiology is better understood, the landscape of disease becomes ever more fragmented; as a result, it is no longer feasible for biopharma companies to have a full suite of capabilities in house while also maintaining high-capacity utilization. This is the economic niche that Evotec fills, providing the ability to have centralized, highly specialized, full-service drug discovery capabilities under one roof and at maximum capacity utilization, often allowing drugs a faster route to market. With a healthy funding environment and the rise of virtual biotechs, the outsourcing trend is unlikely to reverse, providing significant headroom for growth.

Cadence Design (US)

Cadence is the leading provider of Electronic Design Automation (EDA) tools that are used for designing semiconductor chips and electronic systems. In the age of “connected everything,” this company provides some of the key architectural building blocks for the era of the Internet of Things.

  • Cadence’s semiconductor design tools let enterprises combine connected systems with machinery, which contribute to improved energy efficiency through reducing required inputs and increased productivity. Autonomous vehicles, home automation, 5G connectivity, factory and buildings energy management, data security, logistics and navigation, and smart cities all rely on increasingly complex systems, at the heart of which lie integrated circuits on semiconductor chips.
  • Chip design tool companies operate stable business models with high barriers to entry due to the necessary high research and development (R&D) costs, which are enabled by substantial free cash flow. With a unique business model that is agnostic in terms of individual software or hardware, Cadence designs whole electronics systems or individual chips, as well as increasingly small and complex integrated circuits, including those interacting with sensors.
  • Mission critical technology for electronic systems across the entire electronics design chain with a loyal global customer base make Cadence an attractive US information technology company.

Pax Global Opportunities Fund Top 10 Holdings

(As of 09/30/2021)
Holdings are subject to change.

This information is not a recommendation to buy or sell any security.

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