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.

  • Energy efficiency is a core forcus for Equinix, which reuses waste heat and employs technologies such as free air cooling systems, ultrasonic humidification, evaporative cooling and low-power servers. Equinix can help customers reduce the carbon footprint of their supply chains through energy efficiency. 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 such as 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) — big technology companies have their own data centers but rely in part on colocation providers like Equinix. These large customers also seek to become 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 about 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 compound annual growth rate (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 more than 70% of its 4,000 employees holding PhDs, the company is strictly focused on innovation to address unmet healthcare challenges and 100% of its projects are either first-in-class or best-in-class molecules.
  • As medical science advances and pathophysiology becomes better understood, the landscape of disease becomes ever more fragmented. As a result, it will become 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.

Prudential (UK)

Prudential is an international financial services group with operations in Asia and the US. In Asia, Prudential sells health and protection products that help to address the lack of health and social security nets in the region. In the US, Jackson National Life sells saving products that provide solutions to the savings gap.

  • Prudential recently announced the separation of its US business through the demerger of Jackson and a capital raise designed to improve the financial flexibility of their Asian operations post the split. This transforms the company into an Asian-led portfolio of businesses focused on structural growth markets in Asia.
  • Prudential is well placed to participate in the growth opportunities in China through its joint venture with state-backed conglomerate CITIC Group.
  • The Impax investment team believes Prudential is a well-capitalized institution that may offer sustainable double-digit earnings growth at very attractive return on equity (ROEs). The recent demerger should create value for shareholders as investors recognize Prudential’s undervaluation relative to its Asian peers.

Pax Global Opportunities Fund Top 10 Holdings

(As of 12/31/2021)
Holdings are subject to change.

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

IMPX0809

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