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First Sentier Investors (including First State Investments)

PRI reporting framework 2020

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Peering questions

OO LE 01. Breakdown of listed equity investments by passive and active strategies

LE 01.1. Provide a breakdown of your internally managed listed equities by passive, active - quantitative (quant), active - fundamental and active - other strategies.

Percentage of internally managed listed equities
3 Passive
10 Active - quantitative (quant)
87 Active - fundamental and active - other
Total 100%

LE 01.2. Additional information. [Optional]

Active quantitative refers to our joint venture smart beta business RealIndex. The Realindex Funds combine four fundamental measures of a company's economic size (sales, cash flow, book value and dividends) to create a portfolio. Realindex portfolios include additional factors alongside ESG such as quality of earnings and debt coverage, as well as quarterly rebalancing.

Passive refers to traditional market cap weighted index funds. 


OO LE 02. Reporting on strategies that are <10% of actively managed listed equities

LE 02.1. For strategies that account for less than 10% of your internally managed listed equities, indicate if you would still like to report your activities.

Report on strategy

Passive strategies

LE 02.2. Additional information. [Optional]


OO FI 01. Breakdown of fixed income investments by passive and active strategies

FI 01.1. Provide a breakdown of your internally managed fixed income securities by active and passive strategies

SSA
66.8 Passive
0 Active - quantitative (quant)
33.2 Active - fundamental and active - other
Total 100%
Corporate (financial)
22 Passive
0 Active - quantitative (quant)
78. Active - fundamental and active - other
Total 100%
Corporate (non-financial)
10.3 Passive
0 Active - quantitative (quant)
89.7 Active - fundamental and active - other
Total 100%
Securitised
0.9 Passive
0 Active - quantitative (quant)
99.1 Active - fundamental and active - other
Total 100%

FI 01.2. Additional information. [Optional]


OO FI 02. Reporting on strategies that are <10% of actively managed fixed income (Not Applicable)


OO FI 03. Fixed income breakdown by market and credit quality

Update: this indicator has changed from "Mandatory to report, voluntary to disclose" to "Mandatory". Your response to this indicator will be published in the Public Transparency Report. This change is to enable improved analysis and peering.

FI 03.1. Indicate the approximate (+/- 5%) breakdown of your SSA investments, by developed markets and emerging markets.

SSA
85.2 Developed markets
14.8 Emerging markets
Total 100%
Indicate the approximate (+/- 5%) breakdown of your corporate and securitised investments by investment grade or high-yield securities.
Type
Investment grade (+/- 5%)
High-yield (+/- 5%)
Total internally managed
Corporate (financial)
100%
Corporate (non-financial)
100%
Securitised
100%

FI 03.3. Additional information. [Optional]

If you are invested in private debt and reporting on ratings is not relevant for you, please indicate below


OO SAM 01. Breakdown of externally managed investments by passive and active strategies (Not Applicable)


OO PE 01. Breakdown of private equity investments by strategy (Not Applicable)


OO PE 02. Typical level of ownership in private equity investments (Not Applicable)


OO PR 01. Breakdown of property investments (Not Applicable)


OO PR 02. Breakdown of property assets by management (Not Applicable)


OO PR 03. Largest property types (Not Applicable)


OO INF 01. Breakdown of infrastructure investments

INF 01.1. Indicate the level of ownership you typically hold in your infrastructure investments.

INF 01.2. Additional information. [Optional]

The ownership interests we currently hold in our portfolio companies ranges from circa 15% to 100%. Our approach is to ensure that: a meaningful level of equity is acquired (typically greater than 50%); formal board representation is secured; and relevant influence over all material decisions is obtained.

We take an active approach to asset management in pursuit of long-term sustainable value-creation. This is often achieved through controlling interest, or at least meaningful stakes with decision-making influence. Whilst not a criteria for investment, we have a preference for taking 100% ownership of our investee companies; and the evolution of our fund structures increasingly enables 100% ownership. Eight of the infrastructure assets in our portfolio are 100% managed by our business. The average ownership interest is over 60%. These include assets whose ownership is held by various funds and separate accounts, under common management. Any minority interest held tends to be significant, and is typically acquired with additional strategic rationale (e.g. envisaging accretion opportunities, sector access etc.).

We like to take a lead role in acquisitions (most obviously in 100% acquisition scenarios) and lead the agenda in the consideration of all investment issues, including ESG. Furthermore, in instances where we do not acquire a controlling interest, we are sure to carefully select aligned co-investors so that we have a similar approach to all investment issues, including ESG considerations, which extends to defining strategy and approving policies.

We are long-term investors in each of the portfolio businesses we invest in – typically longer than 10 years; and we have examples in the portfolio of infrastructure asset investments that have been held for 20 years. Our underlying investors, such as pension funds, typically have very long term investment horizons. Additionally, the assets in which we invest are typically long-life assets. All of this allows us to a long-term view on business cases and investment decisions. This is particularly pertinent for investment decisions involving ESG issues, which have a positive impact on the value of the infrastructure business over a long period of time. 


OO INF 02. Breakdown of infrastructure assets by management

INF 02.1. Provide a breakdown of your organisation’s infrastructure assets based on who manages the assets.

Infrastructure assets managed by

Breakdown of your infrastructure assets (by number)
Managed directly by your organisation/companies owned by you
Managed via third-party operators appointed by your organisation/companies owned by you
Managed by other investors/their third-party operators
Total100%

INF 02.2. Additional information. [Optional]

In most instances our infrastructure investments are large, complex, multi-million or multi-billion dollar businesses. For this reason the infrastructure assets typically sit, in an organisational context, within a large operating company managed by expert professional management teams. These teams are embedded in the operating company in the investment structure and are responsible for the data to day operations of the respective infrastructure business and its assets.

Our investment team members are always members of governance committees, such as the board of directors or shareholder representative groups. Once appointed to the board, our directors oversee executive management, influence business strategy and embed operational and investment policies (specifically including consideration of ESG issues). We implement and follow good corporate governance codes seeking to facilitate effective, entrepreneurial and prudent management practices that enable the portfolio company to deliver long-term sustainable outcomes for key stakeholders including shareholder, staff and communities. We also seek to create an effective board through board-effectiveness reviews and appointing independent non-executive directors to complement the board skill set. 


OO INF 03. Largest infrastructure sectors

INF 03.1. Indicate up to three of your largest infrastructure sectors by AUM.

Sector

Main infrastructure sectors (by AUM)

Largest infrastructure sector
Second largest infrastructure sector
Third largest infrastructure sector

INF 03.2. Additional information.

Our approach is to invest in 'core' infrastructure. This means that we typically target mature, operating, brownfield infrastructure businesses. These infrastructure businesses have characteristics such as stable, predictable revenue streams, often stemming from regulated revenues or a quasi-monopoly position. Our expertise to date has largely been focussed on transport and utilities in Australia and Europe; however, we are also invested in renewable energy, storage terminals, district heating, car parking, and communications infrastructure.


OO HF 01. Breakdown of hedge funds investments by strategies (Not Applicable)


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