Alternative investment companies will be keeping a close eye on US electioneering given the divergent tax policies of Kamala Harris and Donald Trump and the impact they could have on asset values.

Jefferies investment companies analyst Matthew Hose has calculated the varying impacts of Harrisonomics versus Trumponomics as the race for the White House picks up speed ahead of the November election.

Democratic candidate Harris is proposing an increase in the corporate tax rate to 28% from 21% if she wins the election. This is in line with US president Joe Biden’s policy announced in the full-year 2025 budget, although Hose said that there is ‘limited further detail on additional provisions like interest and capex deductibility at this stage’.

Against this, Republican candidate and former president Trump is planning a reduction in corporate tax to 15% having already left his mark on the tax, reducing it to its current level of 21% from 35% during his 2016-2020 term.

‘The divergent corporate tax policies of the two presidential candidates could result in some modest net asset value [NAV] movements for infrastructure and renewable funds with US exposure,’ Hose said.

Also set to move is the private equity sector, which typically has heavy exposure to US investments, but Hose said this would be limited as ‘tax shielding at the underlying portfolio company level means buyout returns will only have very limited sensitivity to changes in the corporate tax rate’.

SDCL Energy Efficiency Income (SEIT ), a £687m 10%-yielding investor in electric vehicle charging infrastructure and geothermal and biogas projects, is the most vulnerable to US tax changes due to its 70% exposure to the US after the disposal of UU Solar, which the fund confirmed in May would be sold to UK Power Networks Services for £90.8m.

‘Applying this to the fund’s stated corporate tax sensitivity would result in a NAV reduction of approximately 3.5% in the event of a Harris win, versus a NAV increase of 3% in the event of a Trump win,’ said Hose.

All of US Solar (USF) assets are US-based but its project-level leverage minimises the tax sensitivity, resulting in a NAV increase of 2% in the event of a Harris win versus a 1.7% decrease if Trump enters office.

BBGI Global Infrastructure (BBGI) and HICL Infrastructure (HICL ) have US exposure of 10% and 6%, respectively, with NAV reductions of 0.8% and 0.3% in the event of a Harris win versus increases of 0.7% and 0.2% if Trump is victorious.

International Public Partnerships (INPP ) has exposure to US mezzanine debt so it has no tax sensitivity, while Pantheon Infrastructure (PINT ) will likely have exposure to US corporate tax as 36% of its portfolio is in North American companies.

‘The companies are levered and make use of capex so tax shielding should come into play,’ said Hose.

Cordiant Digital Infrastructure (CORD ), the £587m portfolio of data centres, fibre network operators and broadcasting infrastructure, has one US asset – Hudson Interxchange - which is currently loss-making.

Within private equity, most investment companies have exposure to US buyout deals although the impact of Harrisonomics and Trumponomics on them will depend upon how much exposure they have to interest and tax deductions that currently provide a tax shield.

Under Hose’s calculations – which build in assumptions such as 10% revenue growth per year, a 30% operating margin and capex at a rate of 5% of revenue – tax shielding results in changes to the tax rate that are ‘very modest’.

‘The current 21% tax rate implies a 13.7% internal rate of return, falling to 13.2% upon increasing the tax rate to 28%, and rising to 14.1% upon decreasing the tax rate to 15%, with little visible movement in the deal’s multiple on invested capital,’ Hose said.