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Tortoise courts foreign investors with pipeline-focused fund

The new, UCITS-compliant vehicle will provide overseas institutions with tax-efficient access to the North American pipeline market.

Tortoise Capital Advisors has launched an infrastructure fund that will aim to open up North America’s pipeline market to foreign investors.

The Tortoise North American Infrastructure Fund will comply with the Undertakings for Collective Investment in Transferable Securities directive, an EU-regulated framework aimed at attracting investors from overseas.

“The exciting part of the UCITS fund is it provides an opportunity to investors in most countries outside of the US to invest,” Brent Newcomb, a director at Kansas-based Tortoise, told Infrastructure Investor. “There wasn’t [previously] a suitable structure for those investors.”

The minimum investment in the fund is set at $2,500 for retail investors and $1 million for institutional investors. The vehicle will offer share classes in three currencies: US dollars, euros and Swiss francs. The firm did not disclose a fundraising target or cap.

Founded in 2002, Tortoise has long provided opportunities for US investors in energy infrastructure through Master Limited Partnerships and MLP-related securities. For foreign investors, however, owning MLPs is inefficient for tax purposes, the firm said.

“Our sense was that the investors in Europe wanted to be able to access this [market] but weren’t able to do so in a tax-efficient way,” Tortoise Portfolio Manager Brian Kessens said. For foreign investors in Europe and beyond, the Luxembourg-domiciled UCITS fund provides such an opportunity.

With production of crude oil, natural gas and gas liquids on the rise due to technological advancements, and with oil prices ticking up this year, Kessens said the industry’s demand for new pipelines will remain strong.

“We expect the exports of each of these commodities to only increase going forward,” he predicted. “So while the US has always been a very relevant player on the world energy stage, we are becoming even more relevant now.”

Promises by President-elect Donald Trump to streamline regulations and spur the domestic energy industry have added to the sense of optimism.

“He’s indicated that he’s for an all-of-the-above strategy,” Kessens noted. “For us it adds an opportunity for even more capital investments.”