The industry fund has taken a 49 per cent stake in subscription vehicle provider Splend alongside IFM and other co-investors as it looks to build a 10 per cent exposure to climate solutions in its global portfolio.
After years of powering super returns into the double digits, US equities are walking a tightrope, and one misstep could send them plunging to earth. But the story that put them up there in the first place still holds true.
How to capitalise on cybersecurity threats
Cybersecurity breeches may well represent the biggest threat to both corporate and national interests, but investors can also capitalise on the problem. It’s the age-old adage: where there’s muck there’s money.
According to a paper by Robeco, ‘Cybersecurity – Turning Threats into Investment Opportunities’, the spending on cybersecurity by companies, governments and individuals has been stepped up and is growing in the low-double digits annually.
“With the advent of tighter data privacy regulation, a rapidly expanding attack surface and a growing army of resourceful hackers, spending is likely to shift into an even higher gear,” the paper’s authors, Vera Kruckel and Steef Bergakker, say.
“Investors can profit from this dynamic growth market by employing a strategy consisting of a core of established players with durable competitive advantages, supplemented with a basket of young challengers who are the first in employing the latest technologies.”
Robeco points out, though, investing in cybersecurity is not easy. The cybersecurity space is extremely dynamic and has shifted course many times in the past as cyberthreats morphed, offering opportunities for new players with new solutions but also leaving many fleeting former success stories in its wake.
Building a sustainable competitive advantage has proven difficult, even for the most agile operators. The current move from on-premise to cloud computing is presenting the latest, and a particularly challenging, directional market shift, as cloud-based security requires very different solutions from on-premise security.
The fund manager recommends a core-and-satellite approach for investors: “Given the challenges of a rapidly changing cybersecurity environment and the difficulty of pinpointing future long-term winners, prudent investors should seek exposure to this market through a core of established companies with strong competitive advantages and a proven ability to generate economic profits, in our view.
“While to date mostly active in the slower growing on-premise part of the cybersecurity market, these companies are best positioned to build the multi-threat security platforms that are or will be increasingly demanded by clients. To capture the higher growth from cloud-based security solutions, we recommend to supplement this core with a satellite basket of fast growing challenger companies that invent new technologies and currently are mostly active in cloud-based security solutions.”
– G.B.
