$2.8 Billion Electron Capital Is Fundraising After Tackling Succession

After tackling succession, one of the biggest hurdles in the $4.5 trillion hedge fund industry, Electron Capital is on to its next challenge: raising money in the current, chaotic environment.

Electron, which invests in infrastructure, utilities, and companies powering the “energy transition,” believes its strategy will succeed regardless of who is in the White House, according to current CIO and managing partner Ran Zhou, who noted it began managing money when George W. Bush was president.

The firm declined to specify a specific figure it hopes to raise, but the manager believes it has a strong pipeline of potential backers even as the industry has moved away from single-manager funds and toward multistrategy behemoths.

Zhou, speaking with Business Insider during a recent interview in New York, stressed that the firm’s long-term focus, in particular on companies’ rising energy demands and the need to provide this power cheaply and sustainably, is still viable.

For example, infrastructure for artificial intelligence’s power needs has become a hot topic for big-name investors to talk about, but Electron has been thinking about the burgeoning field’s energy needs for years. Regulatory filings show the manager first invested in Quanta Services, an electricity infrastructure company, in 2019 when the stock, now trading at nearly $300 a share, could be bought for less than $50.

“The power thesis is not changing,” said Zhou, who joined Electron in 2005 from a Columbia grad program and never left.

Even clean energy, which is “facing a lot of headwinds,” Zhou said, could be attractive soon as capital leaves the sector and valuations drop. The Trump adminstration has pledged to support the oil-and-gas industry and cut support to cleaner intiatives.

The firm is “like hunters waiting in the bush, waiting for the right moment,” Zhou said.

One of those moments may be happening now: An investor document states that the firm is up more than 3% in its long-short strategy in April through the 25th, cutting losses this year to 1.8%. The S&P 500 is down more than 6% on the year as of press time. Last year, the manager made more than 21%.

Shaver departs, but capital stays

The $2.8 billion asset manager was started by Jos Shaver, who first ran the strategy as a standalone fund from 2005 to 2008 before joining Steve Cohen’s now-shuttered hedge fund, SAC Advisors. Shaver then relaunched the manager in 2013.

He passed the reins to his longtime lieutenant Zhou in October 2023, although he remains a senior advisor to the firm and has a majority of his net worth still invested in the manager.

Unlike many single-manager funds, which are often molded by and marketed around their founders, Electron was able to successfully transition to the next generation, in part thanks to a global roadshow Shaver and Zhou embarked on in 2023 to explain the change to existing LPs.

The result: Net inflows in 2023 despite the leadership change. The manager has enjoyed long-lasting relationships with many backers — more than half of Electron’s top 10 investors have been with the manager for more than a decade.

Zhou said the firm’s message during the roadshow was that there was no star at Electron but instead an investing team that “hunts as a pack,” which resonated with LPs. The connection with its backers has allowed Electron think beyond the next quarter or year, and the manager has built out its team to handle more capital and more work.

The field since Electron’s strategy started trading nearly 20 years ago has grown significantly, and Zhou said there are now 700 stocks in the firm’s investible universe. Given the expansion, the manager has slowly built out its investing team over recent years, hiring five analysts since 2019 to support Zhou, utilities-focused portfolio manager Neil Choi, and Shaver.

“The majority of gains come from long-term holdings and identifying the structural changes coming early,” Zhou said, and the firm plans to keep to that script.