[47] Alta Views: your latest scoop on Private Capital Markets

Hello Alta-natives!

In this edition of Alta Views, we focus on how tech giants like Microsoft and Amazon are turning to nuclear energy to power their data centers, as global energy consumption by data centers is expected to reach 4% by 2030. Microsoft’s partnership with Constellation Energy and Amazon’s nuclear-powered data center highlight the growing demand for clean energy, creating exciting investment opportunities in nuclear fusion startups and energy solutions.

We also explore the rising importance of uncorrelated assets in today’s volatile economic climate. With traditional stocks and bonds facing increased risk, alternative investments like private credit and sectors such as healthcare and infrastructure offer diversification and downside protection. Funds like Ray White Capital RECF II and Veritas Capital Fund IX are outperforming in these areas, demonstrating the value of uncorrelated assets as a hedge against economic downturns.

Fed Initiates 50 Basis Points Rate Cuts with Further Reductions Expected Amid Economic Balancing

• The U.S. Federal Reserve recently implemented a larger-than-usual 50 basis point rate cut, with two additional 25 basis point cuts penciled in for the fourth quarter, bringing the federal funds rate down to a range between 4.25% and 4.50% by the end of 2024.
• In bond markets, long-term government bonds had already priced in this shift, with 10-year T-bill's declining from 4.70% in May 2024 to 3.62% ahead of the announcement. As rates drop, there has been a shift by investors towards investment-grade corporate bonds over high-yield bonds as the yield compression offers limited extra return and added risk of underperformance in HY bonds.
• Unlike its fixed-income counterparts, equities are less predictable because in the short-run its performance hinges on whether the Fed's move is seen as locking in a soft landing, or a sign that the central bank is behind the curve and could crash the economy.

Microsoft Turns to Nuclear Power as Data Centers Are Set to Consume 4% of Global Energy by 2030

• Microsoft has partnered with Constellation Energy to power its AI data centers by purchasing all of the energy from the revived Three Mile Island Unit 1 nuclear plant for the next 20 years, with a projected capacity of 835 megawatts once fully operational.
• With Amazon also purchasing a US$650mm nuclear-powered data center earlier in March 2024, this sets a precedence for tech companies to embrace nuclear energy as an alternative source of energy, as data centers are expected to consume 4% of global power supply by 2030 and is set to top India’s energy consumption by 2034.
• For investors, the rising demand for clean energy to power data centers and other technologies signal a growing market, making nuclear fusion startups and energy solutions attractive, with over US$7.1B raised to date for a cleaner, more efficient energy future.

MAS Plans to Revitalise Singapore’s S$811B Equity Market Growth Amid Global Volatility

• Singapore aims to leverage its strength as the largest REIT hub in Asia (excluding Japan) and attract mid-sized regional companies in the fintech, innovation, and sustainability sector with its unique value proposition- offering both local and regional growth companies' better visibility than they might find in larger global markets.
• To achieve this supportive ecosystem, MAS has outlined three goals: enhancing the pipeline of quality listings, increasing investor participation and market liquidity, and revising regulations to reduce the compliance burden for IPO issuers.
• Implementation will happen in phases across the 12-month review, allowing for faster adoption of feasible measures and more time for complex reforms to revive the local bourse, ultimately positioning Singapore as a hub for companies seeking capital for growth.

The Importance of Uncorrelated Assets in Times of Economic Uncertainty

• In today's volatile economic environment, which faces global remilitarization trends and central banks like the Federal Reserve adjusting interest rates to control inflation and stabilize growth, investors face increasing levels of uncertainty.
• Although rate cuts are often perceived as a tool to stimulate the economy, they can also signal underlying economic weakness, which can lead to unpredictable outcomes— either avoiding a recession (soft landing) or triggering one (hard landing).
• Additionally with two more rounds of cuts lined up, this creates a riskier environment for traditional assets like stocks and bonds, which can become more volatile and often more correlated during times of crisis, moving in the same direction (usually down). Making the appeal of uncorrelated assets— diversification and low correlation to traditional asset classes more apparent.
• Uncorrelated assets are those whose performance does not closely track that of traditional asset classes. Incorporating these into your portfolio can provide several key advantages– diversification to reduce overall risk, lower volatility to stabilise returns, and downside protection to hedge against economic downturns.
• Examples of uncorrelated assets include commodities, real estate, and alternative investments like private credit. The Ray White Capital RECF II fund is one such private credit fund that lends to the real estate sector, with target returns of >14% IRR and zero loss ratio, outperforming equities, which dips by an average of 6% during a hard landing.
• Beyond asset classes, uncorrelated sectors like healthcare, infrastructure, and national security are strong choices. Veritas Capital Fund IX, which focuses on these sectors, averaged a 23.5% net IRR across its past eight flagship funds, positioning them well to leverage the emerging global remilitarization trend.

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Figure AI, OpenAI, Glean, Anthropic, Revolut discover who’s trending with our investor network! Researched by experts, voted by insiders. View our Top Picks here!

?? Notable Fundraises

Blackpanda | US$6.7M | Later Stage VC | Cybersecurity

Blackpanda is a cyber security firm that focused on delivering digital forensics and incident response services in Southeast Asia intended to minimize cyber threats and their impact.

Supabase | US$80M | Series C | Big Data, SaaS

Supabase specializes in developing database management systems designed to handle repetitive workflow. It offers open-source alternatives, database introspection, auto-generating documentation, event-driven automation, and one-click autoscaling, enabling developers to prevent scalability problems and focus on building core products.

Billease | US$68.7M | Series C | FinTech

Billease built a financial app that enables users to enjoy benefits without upfront payments. The app provides merchants with customized installment options, while consumers can use it as an alternative to credit cards or e-wallets, splitting payments into interest-free or interest-bearing installments.

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About Alta Views

A fortnightly collection of the latest news from Private Capital Markets. Put together by Alta’s team of analysts, we bring you the most critical and timely pieces from private markets, to help you navigate the broad horizon. Stay tuned as we bring you the most notable fundraises, analysis on industries and companies trending within investor networks, the latest headlines, and more!

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About Alta

Alta is Southeast Asia’s largest digital marketplace for alternative investments. Alta gives investors direct access to invest and trade in a wide range of curated alternative assets, from direct investment into early to late-stage private companies, PE/VC funds, asset-backed securities of luxury assets, real estate, and more.

As a licensed integrated marketplace, Alta brings the trading and distribution of securities, fund management, and payment solutions under one roof. Through its blockchain-powered exchange, Alta is also able to support tokenization, digital custody, and trading of alternative assets.

Alta is headquartered in Singapore with global offices in Malaysia, Indonesia and India.

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