One of the most innovative ideas in private infrastructure funding is to scale and package financing in ways that appeal to investors. Many nations in Latin America had considerable success in building infrastructure through alternative arrangements with private investors. Among other benefits, public-private partnerships (PPPs) can provide a solution to the problem of the second-best when it is politically impossible to fund new infrastructure through taxation alone.
Distressed debt offers the highest potential return of any type of debt security. Using all the available information can turn the danger of bankruptcy into the opportunity to gain control of the company. The relatively small size of the companies involved, the illiquidity of the assets, and the limited number of players make distressed debt like private equity. These inefficiencies in the distressed debt market create niche spaces where Ashton Global can generate alpha.
By tapping into the markets abandoned by banks, private credit investors are able to obtain higher yields than bonds, more stability than stocks, and greater portfolio diversification. Higher yields are still available to private credit investors. Yields of around 7%-10% can be obtained on private loans to mid-sized companies. Even higher yields are possible when investing in distressed debt. While there is greater risk than in the public bond market, there are also higher returns.
Ashton Global has historically used ESG factors which are vital when valuing companies in emerging and frontier markets. We utilize the Five Forces Model from Michael Porter when applying ESG analysis to our investments. Ashton Global looks at the effects of ESG goals on fair value and revenue, and we also carefully evaluate the consequences of ESG for project costs.
Opportunity zones have significant tax advantages for investors and were designed to revitalize parts of the country left behind during the decade-long economic recovery in the US. Some of them are in old industrial areas and inner cities. Investing in opportunity zones can offer high returns but is important to focus on asset quality and sustainability.