Gary Henson, President and Senior Managing Director, Tortoise met with Julie Cooling, Founder & CEO, RIA Channel to discuss their social infrastructure fund.
Social Infrastructure encompasses anything considered to be essential to society, and covers a variety of industries like education, healthcare, and housing. Under the Private Activity Bond Act, public entities can attract private capital for projects such as a new charter school or a community center. If qualified, these bonds result in lower financing costs for borrowers and provide tax-exempt status for the lenders.
The category is experiencing a huge dislocation in the marketplace right now according to Henson. Historically, this space was reserved for large C-corp banks and private funds, but today, shifts in the corporate tax structure have created a shortage in capital and thus a new market opportunity.
Tortoise, a roughly $20 billion investment firm, known for its focus on energy, launched the Tortoise Tax-Advantaged Social Infrastructure Fund (TSIFX) in March of 2018. The interval fund, offers investors uncorrelated investments, the transparency of a 40 Act fund, but with the added benefit of illiquidity premium. Currently, the fund has $98.8 million in assets under management.