Ecofin Global Utilities and Infrastructure Trust (LSE:EGL) — Investor Presentation

0:00 Good morning, and welcome to the ECOFIN GLOBAL UTILITIES AND INFRASTRUCTURE TRUST PLC investor presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply type in your question and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Neil Wimwood, partner of Prosper Capital. Good morning. Good morning, Paul, and good morning, ladies and gentlemen. Yeah. This is Neil Windward, part of the Prosper Capital team working with our friends at Investor Meet company today, Wednesday, October 14. And we're bringing you an introduction and update on ECOFIN GLOBAL UTILITIES AND INFRASTRUCTURE TRUST in order to enlighten us all on the attractions of the utilities and infrastructure sectors.

0:58 With us, we have Jean Hugues de la Messe, who is the lead portfolio manager. He's been managing the trust for many years now. It produces a daily NAV. We've just gone through the financial year end of September 30. We're also in the tenth anniversary year of the fund. And if that's not enough for you today, then the company has also produced a monthly update this morning on the London Stock Exchange. So in short, it's a very good time for an update. The The trust, of course, invests in utilities and infrastructure sectors, benefiting from the increase in electricity demand with defensive cash flows, long term in nature, often inflation linked. And And John John Hoog's gonna provide an update for us now or covering off why we should consider investing in the strategy, why the Red Wheel team, and why today is the right time to consider an investment in this fund. I I reckon we're going to take about thirty minutes for this run

1:58 through and then as Paul said, we're going go on to Q and A and we'll be done by midday. But Jean Houge, I can hand over to you at this point. Thank you for the kind introduction, Neil, and good morning all. And thank you for attending this presentation on ECOFIN GLOBAL UTILITIES AND INFRASTRUCTURE TRUST, ticker EGL on the London Stock Exchange. As Neil just said, we just celebrated a couple of weeks ago the tenth anniversary of your trust. So I'm very happy to present to you the investment case, you know, the structure of the strategy, the outlook. Obviously, we'll also pay attention to the track record to give you a good sense of the profile.

2:51 This is the ECOFIN team. So we're now part of the Red Wheel Group, a team of specialists. I'm tempted to say a team of passionate specialists of utilities and infrastructure in the world, listed infrastructure and utilities in the world. So I'll start with the characteristics of the infrastructure asset class. We're talking about essential assets here with the main characteristic, which is that the businesses that we invest in are based on long term contracts with pretty solid inflation protection mechanisms. And the beauty of those long term contracts is that they provide high degrees of predictability of the future cash flows, exposure to secular growth trends, and you will see also that EGL is able to provide comfortable dividend income for our shareholders.

3:51 As I mentioned, EGL is a team of specialists. It's a unique vehicle in the world of UK investment trusts as the the the sole trust able to invest in global listed infrastructure. Why now? I believe, and I will explain in the next few minutes, that we are facing extremely solid tailwinds to our investment universe right right now having to do with the structural growth trends, derisking phenomenons, accelerating earnings and returns, and overall pretty attractive valuation level. So I will review all those points in this presentation this morning.

4:38 First of all, a quick snapshot of EGL's strategy. It is a global strategy aiming at providing a balance between North America and and and Pan Europe so as to offset risks, but also gain exposure to all the underlying structural themes that we identified in the space. We like companies which combine income and growth. Let me define this. Income, typically, our portfolio yields around 4%, and EGL detaches a quarterly dividend. And growth, what we mean by growth is very much structural growth as opposed to cyclical.

5:24 We estimate that the companies in our portfolio can grow their dividends by an average of 5% to 7% per annum, which is somewhat higher than perception of utilities in particular and the way this subsector has behaved in the past. So we tend to gain exposure to have exposure to the fastest growing segments of this investment universe of listed infrastructure and utilities. It's a large universe, plenty of companies in OECD economies primarily. We've decided to cap exposure to emerging markets at 10%, mostly for risk purposes.

6:10 And we invest in three subsegments. This is how we define infrastructure, electric and gas utilities first. It's the whole value chain from power generation, including renewables, down to the supply of of power or gas to the individual homes or industrials. We also invest in environmental services. This is water and waste management. And we invest in transportation infrastructure, which consists mostly of airports, toll roads, tunnel services companies. So this is how I would define the strategy of your trust.

6:57 Track record, This upper part refers to the the the the the last fiscal year, which ended the end of twenty five. So it's already old information somewhat. I'll come in the next slide to more granularity on the track record. What I would like to point out on this slide is very much the dividend growth profile. Our Board has been very eager to providing to our shareholders regular increase in the dividends that, again, EGL pays out every quarter. Over the past five years, dividend has increased by 5% for our shareholders. So this is consistent with the underlying growth of dividends that I referred to for the companies in our universe, and it's also, again, very much a priority for our board.

7:50 A bit more granularity on our track record as we again just celebrated the tenth anniversary of of EGL. So I think it's interesting to look at the past decade. The net asset value of your trust has increased by a little bit above 10% per annum over the past ten years. And maybe more importantly, who... For you who are listening this morning, particularly for those of you who have been holders of EGL over the past decade. So for our shareholders, the total return that our shareholders have received over the past ten years is of 13% per annum, one three, including dividends and net of fees, of course.

8:36 It's interesting to put this in perspective of, first of all, the underlying sectors in which EGL invests. If you look at utilities, infrastructure, you're talking about something like 6.5%, 7% per annum. So it compares favorably. It also compares favorably to the FTSEEL share index, up around 8% per annum over the period. And maybe quite importantly, it compares quite well with the general equity indices. If I look at the MSCI World Index at 12 and a half percent over the past decade per annum, this has been delivered with a a lot higher volatility and risk than EGL.

9:23 So EGL has been able to provide those returns over the past decade with no exposure to tech, obviously, much lower volatility than general equity markets. So from our perspective, much lower risk and pretty attractive double digit total returns per annum. So I thought I would highlight this because it's quite important to give you a sense of the investment profile of, you know, EGL for our for our shareholders. A quick mention of the past couple of months. The reason why I mentioned it is because as you can see on on those numbers, we've just lived through two difficult months, August, September 2026, very much related to the trend in low bond yields. As you can see actually on the table in front of you, it's a phenomenon which has hit the sectors of UTILITIES infrastructure, listed UTILITIES infrastructure, not only EGL, and it's been difficult to be completely immunized against that phenomenon.

10:30 What is interesting is that if we look at the past occurrences where we've had such acceleration in long bond yields, you know, we've seen it in The US long bond yields or in The UK passing the 5% threshold. When we've seen such fast acceleration trends of low bond yields in the past five years. And when those low bond yields have started to peak, these have been some of the best entry points in our investment strategy. Each of the past occurrences, if I look at October 2023, January 2025, were accompanied with about a 10%, 15% hit to the sector, pretty much what we've just had over the past couple of months, but followed by some of the best performance in the following twelve months, around 30% plus.

11:25 So I'm not saying it would necessarily happen again this time, and I'm not saying that US long bond yields or UK long bond yields have peaked. But I think this is a point to watch because typically, historically, these have been some of the best occasions to invest in listed utilities and infrastructure to invest in EGL.

11:49 A quick word also about discount premium to the NAV, the net asset value. Interesting that over the past few months since late April twenty twenty six, EGL has gone back to a slight premium to its net asset value similar to what we had seen over the twenty twenty to twenty twenty three period, which has allowed us to issue new shares to the benefit of all our existing shareholders because those equity issuances have made at a premium to your net asset value. Therefore, they are enhancing for your earnings and dividends. So this strategy, I already kind of mentioned it, but this is a wrap up in this slide.

12:41 Essential assets, asset backed services, long term contracts, providing high degrees of predictability of future cash flows, which helps us gaining exposure to sustainable and growing dividends. This is a common characteristic between all the names you're gonna see in our portfolio. So now I'm moving into the investment thematic of infrastructure, and and I'll mention specifically the themes that we are seeing emerging today. The the big, bold picture of infrastructure today is that we live in infrastructure, which was largely built in the nineteen fifties, sixties, seventies, post World War two, I would say.

13:33 So in average, our infrastructure in The UK and in Europe is about fifty to sixty years old. It dramatically requires capital expenditure to renovate such aging, sometimes obsolete infrastructure. All our tunnels, bridges, airports, energy pipelines were built about fifty years ago. And what is interesting is that the more CapEx typically, the better it is for utilities and infrastructure. We've illustrated this with the chart to the right of this slide, the example of Turner. Turner is a power transmission company in Italy, leading company.

14:22 And as you can see, we've put in the the the dark bars, the CapEx budgets and the CapEx budgets have turned up, and the the gray line is the share price. So there's quite a high degree of correlation with the CapEx budgets and the returns you... You're getting shareholders. So the more CapEx, the better it is for utilities infrastructure. It's not the case for all sectors. And we are clearly entering a CapEx phase.

14:54 This CapEx phase, we believe, is strongly supported by governments or by regulators. Let me explain that. As I mentioned, our infrastructure dramatically needs investment to get renovated. This is why The United States voted in 2122, the inflation reduction act, very much to renew infrastructure. And this is why Germany voted last year, 2025, a €700,000,000,000 investment program. And if you look to the left hand side of this slide, you'll see where the money is bound to be allocated. Almost half of the program is dedicated to power grid, a key aspect of our investment strategy, key focus.

15:47 Part of it will also be spent in renewables, in flexible power generation, and in transportation infrastructure. These are the core elements of our investment strategy as I just described. So such a program represents significant support for the incumbents in our space and for the growth coming up. Now, obviously, very few states can afford to spend €700,000,000,000 or such amount beyond The US or Germany. So for most countries, which have budgetary constraints, The UK is not the only example, regulators have to come and incentivize their investment phase. So while regulators in the past were very much here to make sure companies would not over earn, This obviously remains part of their mandate, but we are seeing a trend where regulators are now much more focused on incentives to make sure that listed companies, private companies do spend the money to renovate our infrastructure.

16:59 So this is very fruitful from our point of view. So that's the general picture. Now EGL provides exposure to three specific themes, which I'm going to describe here and which are, from our perspective, groundbreaking. The first one is about accelerating demand for electricity. We are coming out of twenty five years of declining demand for electricity. This chart on the upper part of this slide 11 is for The US. You see just a 9% increase between 2000 and... Roughly 2025 for electricity consumption in The US. In The UK or in Europe, it's been declining.

17:45 So we, in The UK, we consume 1515% less electricity than twenty five years ago. We, Why is that? Mostly because of efficiency gains. The the the the lighting in this room consumes about 80% less electricity than the traditional light bulbs that we were used to about fifteen, twenty years ago used to consume. So dramatic efficiency gains have explained a decline in power demand in the past twenty five years. This is getting pretty mature. And what is ahead of us, and it has started pretty much last year, is a period of accelerating demand for electricity. You see on this chart for The US, 40% increase in power demand expected by 2040.

18:38 For The UK or Continental Europe, it's even more than that, plus 50% expected by 2035. So this is a dramatic mean reversion, accelerating trend in power demand based on electrification of our industrial processes and home uses, factors like, heat pumps, electric vehicles, and more recently, accelerating demand from AI data centers. We all hear about that today, but it's very new trend with the first contract of that type from Amazon signed with The US utility in Pennsylvania in March 2024.

19:26 So this is a phenomenon which is only about two years old, but the development of data centers demand for electricity is bound to be a critical factor of growth in the years to come. If you've listened to the CEO of NVIDIA again this year, he would have told you that, obviously, semiconductors for the tech industry is a critical factor. But in fact, one of the main hurdle to their growth is electricity supplies. So EGL invests at the core of that thematic of electrification and is bound to benefit from these rising trends after twenty five years of declining demand. And look at what happens to those companies which are well exposed to the trend. The bottom right chart, this is Constellation Vistra to US utilities, exposed, mostly because of their nuclear capacity.

20:24 And since the end of twenty twenty three, by the way, those were two of our significant holdings. The share price of those two stocks is dramatically rerated. The valuation has dramatically increased notably because of their positioning to benefit from those new trends of power demand at a time when power generation resources as... Are as scarce as ever. So this is the first first phenomenon, accelerating demand for electricity. There is a second factor which is very much overlooked by generalist investors, we believe. It's the derisking of the typical business model of utilities and infrastructure names. The upper chart here, the bar chart, is a picture of the 10 largest utilities groups in Europe, how their business mix has evolved over the past fifteen, twenty years.

21:23 If you look at 2008

21:25 on the left hand side, 42% of the operating profit of this top sample of top 10 European utilities, 42% was stemming from conventional power generation, very much a merchant business, I. Highly dependent on the external price of commodities. When commodity prices, oil, nitric, gas, coal, were going up, it was very favorable to their returns when they were going down. It was unfavorable. This proportion of 42%, close to half of their operating profits, has shrunk to about 10% today. And what has replaced this for the same sample of the 10 largest companies is a combination of regulated businesses and long term contracts.

22:16 Those two now account for 80% of the operating profits of that same sample. So it's a dramatic evolution and a dramatic derisking. And what is interesting is that all those contracts that I just referred to signed by AI data center companies with utilities, power generators, assigned for periods of typically twenty years with closes to renew them for thirty, forty years. So we are entering a stage where the large utilities are now signing contracts with very high degrees of predictability of their future cash flows, very high inflation protection mechanisms for the next twenty, thirty, forty years.

23:04 Those are the best contracts that those companies could have dreamt of, and this is what we are seeing as a phenomenon today. So dramatic derisking of the utilities business model, in particular, is something which is largely overlooked by journalist investors and very much yet has to be discounted by the equity markets. We'll see the valuation terms in a few minutes. And there's a third phenomenon I mentioned that I wanted to highlight three. It's about enhanced returns. I just referred to those long term contracts, and those two charts for The US, the left, for Europe to the right, show you how the price at which those long term contract, we call them PPA, power purchase agreements, the price at which those contracts are being signed for the long term.

24:05 Today, in The US or in Europe, it's pretty similar. We're talking about 70 to €80 or dollars per megawatt hour, pretty similar. It... It's going up in The US. It's plateauing in Europe. But what is interesting is that those price levels are about twice the levels that electricity was sold at in average over the past twenty years. And when Amazon, Google, Meta signed those contracts, they even signed them typically between a 100 and a $120 per megawatt hour. So on even higher price levels. I don't think they're out of their mind. What it is showing is that electricity is a critical factor to the business model of those companies.

24:58 They need to secure the power supplies over the long term. At a moment when the world, particularly industrialized economies, have dramatically reduced their capacity of power generation because we've phased out of coal. In The UK, it was fifty percent fifteen years ago. It's now 0% of The UK electricity coming out of coal. We have not invested in nuclear. So we are reaching a stage where there is a real issue of scarcity of power generation capacity with demand which is increasing. Extremely favorable conditions for the returns of the incumbents. So this is what those charts are are showing you. Prices are going up. And by the way, the more of The US Administration challenges renewable developments, the higher those prices are going because it enhances the scarcity issue.

25:57 And look at what it means in terms of earning growth outlook. On the left hand side here, the curves are showing you how the consensus of earnings expectations has evolved for European and US utilities over the the the past twelve months. Earnings expectations have increased by eight to 12%. Let's say about 10%. This is a massive upgrade of guidance from companies, of expectations from analysts. So they are all increasing their expectations for future earnings growth of the companies in our investment universe. On the right hand side, we're expressing this for US utilities, the S and P 500 utilities index. Look at how dramatic this acceleration trend is is proving to be.

26:54 We are investing in a space which historically had earnings growth of 1.5, 2%. We're now entering a phase where we believe it's gonna be at least 9% per annum in The US. This is a dramatic acceleration, again, related to the significant CapEx trends, accelerating demand, higher tariffs that companies are getting. So in a nutshell, you look at the three subsegments that EGL invests in. Utilities, we expect about 6% EPS growth per annum. Environmental services aid. Transportation in... At least six. This is very solid background for the five to 7% expectation of long term dividend growth.

27:42 We actually believe that those numbers could look very conservative If I consider what we are hearing from the companies in our portfolio today, we've seen a lot of them raising their earnings expectations at the last quarterly report that they issued over the summer. So those are the three significant themes that we are seeing emerging, and we think it's far from being discounted. So let's spend a minute on the valuation terms of listed infrastructure and utilities. Interestingly, despite the very strong structural trends and mean reverting trends in some cases that we are identifying, very strong supportive trends for earnings outlook.

28:34 Well, actually, the relative valuations of listed utilities and infrastructure are not so far off from the lows. These are the two charts. The bottom left chart is quite interesting. This is a quite long term perspective. And as you can see, the relative price earning multiple for global infrastructure, this is the SMP Global Infrastructure Index, very close to the story close. And what I would highlight even is that EGL provides you with exposure to the the the cheapest, the lowest valuations that you can find in the space,

29:12 you know, when an average global infrastructure are trading at about 18 times p at the moment, EGL's portfolio averages 15 times. So we invest in even in the cheapest companies in the space with the fastest growth outlook, and EGL also provides a superior dividend yield, 3.9% as of today, very much in line with the kind of typical commitment that we took ten years ago.

29:46 Those who seem to have realized the significant undervaluation of infrastructure relative to their very strong fundamental outlook are private equity investors. It's interesting because, you know, private equity dominates the world of infrastructure. Listed infrastructure is a subsegment of the space. And, typically, private equity investors tend to have a better sense of long duration business models. They have a longer term perspective when they invest compared to listed equity investors who are much more influenced by short term phenomenon and quite often by interest rates. I mentioned it upfront. And what we are seeing is that private equity specialists, first of all, have gathered records amount of cash over the past couple of years.

30:37 About $200,000,000,000 for the top five or six Brookfield, BlackRock, Macquarie, EQT, Blackstone, KKR, all of those big names, well known names of infrastructure specialists, private equity infrastructure specialists. They raise record amount of cash. And secondly, the premiums they are paying for assets in our universe, sometimes listed assets, keep on increasing. Over the past eighteen months, we've seen two take private transactions, two listed companies taken private, Energex in Canada, taken private by case the depot UK bank for an 80%, eight zero, 80% premium to the average share price. AES, US utility, you know, acquired.

31:27 It's actually ongoing by BlackRock and EQT for about a forty percent four zero premium to the share price. So we're seeing a big valuation gap. And, you know, one further illustration of this phenomenon is airports. We've shown that at the bottom right of this slide. We've taken the the last 10 transactions, private transactions of airports in the world, and they've averaged around just under 20 times EV EBITDA as a multiple, 19 something. Now if you take the listed airports, they have reached less than 10 times. So a ratio of one to two for similar assets between how private equity investors value them and how listed equity markets value them. That valuation gap is pretty much unprecedented.

32:22 We believe it is an anomaly and potentially major upside potential for the valuation of listed infrastructure and utilities names that EGL invests in. I'll finish with an overview of our portfolio. You have here on this slide 17 our top 10 holdings. As you can see, you've got a broad diversification of geographies, US, UK, Europe. You also have, and maybe more importantly, a good diversification of business models. We invest in regulated utilities and nonregulated. We invest in transportation infrastructure, which sometimes is regulated or not.

33:14 We invest in environmental services. Actually, probably the eleventh holding is Veolia, French water management company. So we very much pay attention to the diversification of our exposure to gain on all the underlying thematics and also to diversify the risk.

33:37 All of that, again, also to lead to a portfolio's typical volatility about 30% lower, so less risky than general equity markets. So we are risk averse. We want exposure to structural trends. And these, I believe, are companies with very sound outlook and strong fundamentals as we can see them today. So this is what I wanted to highlight this morning, and thank you for listening. Before I hand it over back to Neil, what I would highlight as a wrap around what I just explained, ECOFIN, again, is a team of specialists, global listed infrastructure. We only do that, and we're passionate about it.

34:29 We very much aim at identifying those companies which benefit from transitioning business models largely related to energy transition and know how to adapt and provide exposure to structural growth trends and also with capital preservation characteristics through dividend income. And the last thing I would say is that the outlook for the steel infrastructure or the asset class overall has rarely been as strong, at least from my perspective, as what we are seeing today, while it remains dramatically undervalued under price earning multiples and on the valuation gap between listed and private equity transactions, as I just highlighted.

35:22 Neil, I hand it over to you, and thank you very much for your attention. Open to questions, of course, now. Fantastic. Look, thank you very much indeed for the presentation. Ladies and gentlemen, do please continue to submit your question just using the Q and A tab situated on the right hand corner of the screen. But just while the team take a few moments to review those questions submitted today, I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q and A can be accessed via our investor dashboard. Neil, as you can see, we've had a number of questions come through already. So thank you very much for everyone submitting those. If I could just hand over to you just to read out those questions where appropriate to do so, and I'll pick up from you at the end. Lovely. Yes. Indeed. We have had some questions. We've had a few, Jean Houg, I would describe as sort of background and sector questions. We've got a couple on risk, and there's one on investment policy at this stage. So let me just start off, I think, with the sort of more background and opportunity kind of questions, if I may. So first of all, have investigations been able to determine what exactly were the causes of the Spanish power outage in April 2025?

36:30 Thank you for your question. It's actually a very important point because it does illustrate what happened in Spain last year, the dramatic shortage of power generation capacity at a time when demand for electricity is starting to increase.

36:53 Interestingly, it's been difficult to identify the real causes and people or companies or systems responsible for the dramatic power outages that the bulk of Spain had to go through last year. What I think it actually illustrates is the fact that Spain has been investing very heavily in intermittent sources of power, renewable energy. We all hear about that, and this is a one way trend. You know, decarbonization is obviously a key focus for our economies and our political powers across OECD certainly, and it will continue.

37:41 So the world will continue to invest in renewables. However, the issue that we are facing is that renewables are intermittent sources of power and are unable to fully replace what we call baseload technologies that we were used to, such as coal, nuclear, or natural gas. Those are baseloads, so they are able to provide twenty four seven electricity. So we've been replacing a lot of baseload with intermittent sources, which would have worked better if we had in parallel a progression in the battery technology. And battery technology has been slower than expected, I believe, to develop. So today, it's a very imperfect backup and complement to wind and solar power generation resources.

38:35 So this is what we've seen in in in Spain. And Spain... Why particularly in Spain? Because Spain is like an island. Today, you only have one interconnection line between Spain and and France. So when Spain has a spike in Panama, has to be self sufficient, and their system proved not to be. So... And I'm... The last point I would highlight this is what is the solution to this phenomenon? Because, obviously, we're not gonna build a new nuclear in Spain overnight. It's gonna take probably a decade.

39:16 And we're add a lot of renewables, but as long as batteries don't come to help, you're gonna need really a lot to really back up baseload. So the critical note here is about power transmission grid, a core focus of EGL's investment strategy and of our portfolio as of today. We believe that grid companies are potentially the big winners of this phenomenon of scarcity of power generation resources illustrated by the dramatic power outages that Spain faced last year. Excellent. Thank you very much indeed. Now you did mention nuclear, and we've had a couple of questions on that particular set. So let me just sort of put them together, if I may. So is nuclear investment at a point where it will accelerate?

40:12 And how close are small modular reactors to reaching the market? Yeah. Thank you for the question. So this is a very interesting point. I remember discussions with my US colleagues. We have a presence in the in The US with with Red Wheel, with offices there, four, five years ago. And most of them were extremely skeptical on nuclear technology, saying, you know, The US has closed the door to nuclear. The US will continue with its existing fleet until the end of its... The term of its lifespan, but it's highly unlikely that The US will go back into an investment phase in nuclear.

40:58 And this has dramatically changed since then because notably of the rising demand from AI data center companies. Nuclear has reappeared as the sole technology able to provide twenty four seven electricity with hardly any carbon emission. Typically, what a lot of those new companies, new sectors are looking for, decarbonized electricity, but also stable baseload electricity. So nuclear is making a dramatic comeback. There is there there was a nuclear component in the IRA, the inflation reduction act voted by The US. So The US are now, you know, turning that that that page of the the the past perception of nuclear and reinvesting it to nuclear, notably through SMRs, as you mentioned, small modular reactors.

41:56 And, actually, in Europe, we're seeing very similar debate. Countries which were very against nuclear, Italy. Italy voted by referendum the phase out of nuclear after the general bill drama a few decades ago, and the government is now suggesting they may organize a new referendum to come back into nuclear. So nuclear is now perceived again as a technology which could help. SMRs now, to come to the the second part of your question, Neil, and thank you for the person who's asked it. SMRs are definitely a promising technology because we're talking about smaller reactors. Amazon is bound to build such small modern reactors in US. I don't think this is bound to happen in in in Europe or or The UK.

42:48 But even with that ambition to build those smaller reactors, it's gonna take a few years. If you take into consideration the authorizations, the licenses, the the the risk assessments, we're talking about a technology which will develop probably in the next five to eight years. But in the next three to five years, you are unlikely to see significant development of SMS. It's gonna take time. So it could be a solution. It's not a cheap solution. It's actually quite expensive. And, again, for safety reasons, you're gonna have a lot of, you know, regulations around it. But it potentially represents a a shorter term fix than an EPR, which is the other nuclear technology, which takes 15 to build.

43:38 Understood. Thank you. So we've got one or two questions on what I would describe as as risk, actually. And just to start off with one which is almost asking for a case study, I guess, saying, could you give me a specific example from the portfolio where market volatility created an opportunity and explain what ultimately determined whether it was successful? Well, that's a tough question. I think I referred to the the the the past two occasions because I guess your question refers to the volatility event triggered by the the fast moving normal news. What I would say, I'm going to answer in two in two parts, if I may.

44:25 Hopefully, that would address the the the point of of the the the listener here. First of all, let's not forget that five years ago, long bond yields were at 1% in The US. Over the past five years, they've moved from 1% to 5%. They're now above 5%. Typically, for those investors who still see utilities infrastructure as a bond proxy asset class, which, by the way, it's it's it's hardly hardly any longer, But that's the past historical perception. You cannot think of most significant more significant headwinds than normal deals moving from one to 5% in five years.

45:14 And if you look at our track record, I've shown you the numbers previously, EGL has managed to navigate through that and generate significant returns in that environment. So that's why when I look at the evolution of the past couple of months where we've seen about an... Something like an 80 bps, 80 basic... Basis points increase in The US long bond yields or UK long bond yields, very similar profiles in in just about three months. This is quite a dramatic acceleration.

45:54 But in fact, the scale of our space, it's bound to be more a short term issue than a structural one. So, again, we are now in a situation like in October 23 or January 25, where we have some of the highest quality names, 10 to 15% cheaper in just a couple of months. So do we have examples of companies, because I guess this is your question, that we acquired on the cheap in those occasions, for sure. Again, in both cases, the rise in EGL NAV in the following twelve months has been between 3040% because of that. So what we have avoided, for example, is those regulated utilities names with no inflation pass throughs, typically Spanish regulated utilities.

46:51 Those which we have favored are those with significant inflation protection mechanisms, which we have found in particular in Italy. If you want one example, I mentioned earlier. Typically look also at the behavior of National Grid. These are stocks which tend to suffer short term from big volatility events and and accelerating trends in long bond yields. But over the following six to twelve months, our big beneficiary because they give you an entry point at about a 10% discount to the normal valuation for very high quality growth profile, structural growth. So this is how I would answer to the question from this listener here this morning with a lot of conviction, very high conviction that we we... We're talking as soon as longboard deals will peak.

47:51 You will realize that high quality names can be acquired 10, 15% cheaper than they were a few months ago. Excellent. Thank you. And we've had a question on the sort of investment policy. And, I mean, I'm just looking at your fact sheet released today talking about Asian holdings, Vistra, and some European holdings bucking the trend and contributing positively to portfolio. The question in particular here is about the opportunity set, and you describe a global remit that seem to have a very strong bias to USA, UK, and Europe, and only 5% in Asia Pacific. But even with your cap on emerging markets, the question is, are there no good opportunities elsewhere?

48:38 No. Think there are very good opportunities in emerging markets. But by status, we decided ten years ago to cap exposure to emerging markets at 10% for EGL. The main reason is risk profile of the the trust. As I mentioned upfront, we we are very careful not to enhance the the the volatility of your portfolio, and we're happy with the beta, you know, the beta which gives you a sense of volatility of about point seven versus general equity markets. What I mean by that, for those of you who are maybe less familiar with the notion of beta, is that typically, we we are about 30% less all the time than general equity markets. If you invest in emerging markets, you're going to have to face much higher volatility.

49:28 Stocks which may go up 50% in a year, but then lose 30% the year after. We... We're very cautious on those ones. That's why we've been so selective in our exposure to emerging markets. Another reason is, to be honest, because we are seeing such solid and strong structural trends in OECD economies. Why would you take higher risk in gaining exposure to emerging markets when you have such strong investment cases in more stabilized economies. At least that's our perception. This is the strategy of EGL. Again, by choice, we've decided to do that ten years ago. We're not planning to change it. So where does our emerging market exposure stand today? Just a few stocks in China, which are trading on very low multiples, sometimes four, five times p.

50:22 Good earnings growth outlook, but which are proving to be highly dependent on flows... International flows into the Hong Kong market. So very volatile, something we don't control. So it it... It's always going to be a pretty small proportion of our exposures. So we very much would rather keep exposure, dominant exposure to North America and and Pan Europe where we are sensing that you have dramatically attractive opportunities, very compelling names. You mentioned Vistra. This has been a great story for us over the past couple of years, but it... We don't want to be single thematic

51:04 exposed, if I may express myself this way. You will always see diversification, but mostly between OECD economies with limited exposure to emerging markets here. Makes perfect sense. Now you have... I'm down to the last question, actually. So if if I can just conclude with this one. In some ways, you've answered it, but in other ways, I think it's actually quite a good question. And apologies to the person who's asked the question. It's quite long, so I'm gonna try and distill it down if I may and just simply ask, you know, when the utilities and infrastructure sector comes under pressure, which you talked about, what indicators do you find most useful to distinguish between short term dislocation from long term investor case deteriorating and and differentiating between those two things? Because you've been very articulate about the fact that we are... We do have tailwinds here, but...

52:03 There any... We... Thank you. Yes. So I I think I get the I get the point. We are fundamental investors, and we're driven by bottom up qualities of the companies we invest in. As much as we can, we try not to be... To pretend that we can be smarter than the market in sensing the general external factors and how they're going to evolve. You know, I'm I'm watching interest rates. I think it's very important to know where we position there. I'm not here to tell you whether long bond yields will go up to 6% or go back down to five in The US or UK.

52:52 So we... We're not trying to be overly opportunistic on on top down criteria, which obviously are key to understand. But our portfolio consists of companies which have very solid structural trends ahead of them. So what we do all day long, all year long, is we meet with regulators. We meet with government representatives to understand the framework on which the companies we invest in operate in, and we meet with companies. And quite often, we see companies like... Again, we've seen again during the summer, which not only provide a high degree of predictability of the free cash flows, even tell you, you know what?

53:37 It's getting better and better. So we used to increase our earnings by three, 4% per annum. We now think that in the next three to five years, we're gonna grow at six, seven, 8% per annum, quick accelerating trends for good reasons, not based on short term phenomenon or cycle, but because we are signing more and more long term contracts. So this is typically the trends we are interested in. We focus on the long term trends, long term cash flow perspective, long term dividend flows. This is our motto. So when on top of that, we can find an opportunity to acquire those names at a discount to where they've been trading in the past,

54:22 helped by a short term dislocation, this is when we need to show our conviction. It's never enjoyable to have a storm, to be in the middle of the storm, but we know that in the past, based on our experience of the past decade at least, more so for myself, those have been the times when fundamentals have to be the winners if you have a perspective which goes beyond the next couple of months. So this is our motto. This is our drive at ECOFIN. We focus on the fundamentals, we see dramatic structural trade... Tailwinds today in our space with very limited effects on the fundamentals and the economics of the companies we invest in from the short term fluctuation in interest rates.

55:10 So this is very much what drives us today. Look. We were indeed electrified, I think, from from Jean Hugues' commentary today, learning about the key structural trends benefiting this sector, including aging infrastructure and the likely significant growth in electricity consumption. These are very long term trends as we heard that will likely take many years to play out and provide long term support for this investment opportunity. And EGL provides the best, cheapest, fastest growing listed equities in the sector and manages to benefit from the differential in cost of capital between listed equity and private equity money, thus benefiting from the valuation gap private equity has created in this sector. And all of this access to critical infrastructure with inflation linkage leads to a nice mix in EGL of income and growth with lower volatility than general equities, and it produces dividend growth on average in recent years of 5% per annum.

56:09 And despite these attractions and the tailwinds for the sector described, incredibly, the infrastructure sector has not yet rerated. So together with the move in bond yields in recent weeks and months, we would argue this is a great entry point for those considering an investment. And this investment trust is available to buy via your chosen retail investment platform under the ticker EGL. Many thanks for your time today, Jean Hugues. I to you. And ladies and gentlemen, until next time. Fantastic. Thank you very much, Noel. Thank you, ladies and gentlemen. That concludes today's session, and good morning to you all.