Alexandra Prigent-Labeis, Managing Partner of Accellency, moderated « the top 5 trends in private markets » panel at IPEM 2022 with exceptional speakers: Joana Rocha Scaff, Managing director and Head of Europe Private Equity at Neuberger Berman and current Chair of the LP Committee of the BVCA (British Private Equity Association); Johnny el Hachem, CEO of Edmond de Rothschild Private Equity and Jim Garman, Co-Head of EMEA Goldman Sachs Asset Management in charge of alternative assets.
Here were the key takeaways:
The Democratisation of Private Equity
Down to €50,000 tickets. Expanding from high net worth to retail distribution.
Technology changing the game with digital platforms offering premium UX.
What about liquidity and transparency? Accompanying retail LPs on their learning curve.
“For this to work, the structure should be adapted to address the pain points. But the offering, the fundamental offering content should not be watered down. (…) Hopefully, managers are giving retail investors access to the same high-quality products they're offering institutional investors. This is super important. (…) In addition, two key points are, obviously, transparency and fee efficiency” Joana Rocha Scaff - Head of Europe Private Equity, Neuberger Berman
The “Barbellisation” of the GP landscape
Large GP platforms reaching JUMBO status as a result of a multi-strategy consolidation frenzy, in order to serve LPs across their asset allocation.
Specialist GPs in the spotlight with increased interest from LPs for specialised teams and strategies, whether by sector, investment stage, EV size or business model.
“There's been clearly a concentration of capital with these groups that have those resources. In fact, for instance, creating a little bit of a problem because those groups seem to be actually very successful and many have been very successful, but the fund sizes have grown a bit too large and at some point, you don't want to just have exposure to large caps. I'm very much keen to see perhaps not very subscale smaller funds, but perhaps the new market adapting to the new reality so that investors like us can have a bit more diversified exposure across company sizes.” Joana Rocha Scaff - Head of Europe Private Equity, Neuberger Berman
Private companies staying private longer
New liquidity paradigm leading to market normalisation.
Public markets sell down postponing and reducing IPO opportunities.
GPs may need to adapt to support fundamental growth as healthy companies are likely to stay private longer.
It also ties back to the start of the conversation about the ability of retail investors to access private markets. As more and more companies stay private for longer and the number of public companies comes down, obviously, the universe of investable companies, if you can only access public markets, is shrinking. It all ties together. We believe that more and more companies will stay private for longer and longer (…). Making those companies available to retail investors is important.” Jim Garman, Co-Head of EMEA Goldman Sachs Asset Management in charge of alternative assets
A call for purpose-driven private markets
2022, a year of catastrophic climate events: Covid, energy, geopolitics…
The widening inequality gap: Are private markets playing their part? Calling for long-term investment to accelerate transition.
“Sorry to say that, but the house is burning, we have cash, we have means. We need to change a bit our mindset and leverage on the skills of the men and women and do things differently. Let's build a proper infrastructure which makes us resilient. Let's revisit our stock of real assets and do it differently.” Johnny El Hachem, CEO of Edmond de Rothschild Private Equity
Shift in investors’ asset allocation
Focus on Direct lending and floating rate private credit with low duration profiles in a rising rate environment.
Private markets remaining core to allocation with resilient valuations vs. listed asset volatility.
Potential shift from Equity to Credit to Real Assets ahead of a general economic slow down.
“Number one: clients, investors are going to revisit the whole asset allocation and ask themselves the question: ‘Can I actually tolerate a higher allocation in private markets or do I need to adjust?’. Then, I think, we're going to see a lot of activity in the secondaries market as clients adjust their overall private market allocation by accessing the secondaries market quite actively. (…) We're going to see clients also adjust their portfolios to get more allocations for things like private credit which come with, obviously, a safer, shorter duration, high-yielding asset in a rising rate environment. Then with inflation, we're certainly seeing a lot more appetite for certain parts of infrastructure and certain parts of real estate as well.” Jim Garman, Co-Head of EMEA Goldman Sachs Asset Management in charge of alternative assets