Private equity investment services and solutions
Seeking favorable returns through private equity investment
Private equity has a history of performance that often exceeds 8% return per annum, making it an attractive asset class for investors. It encompasses a large ecosystem of investment opportunities around the world, covering more companies listed than equities. Some distinct strategies uniquely exist within the private equity market, including early-stage venture capital and corporate turnarounds.
Building a private equity portfolio is very different from building a traditional portfolio. It's a long-term process implemented over the life of a portfolio. Consistently refreshing a portfolio with new commitments is resource intensive. Good relationships with private equity managers is a critical component of a successful private equity investment. As an experienced advisor and implementator, we connect clients with general partners and enable new limited partners to build their portfolios on a solid foundation.
Higher returns due to market inefficienciesPrivate equity markets tend to be more inefficient than public equity markets, particularly for small to medium organizations. Private equity firms may take advantage of the mispricing that exists and potentially earn higher returns.
Expanded universe of investment opportunitiesAbout 99% of midsize organizations are not traded on listed equity markets and only 3% are owned by private equity firms1. Private business therefore represent an opportunity for investors.
An illiquidity premiumA lack of liquidity in private equity markets (in comparison to public markets) can provide an upside for investors in the form of an illiquidity premium. Those who deploy capital to private equity may potentially earn higher returns as a result.
Five steps to define your private equity investment strategy
Private equity is a long-term commitment that requires a detailed but flexible allocation plan. It can take several years to establish a meaningful allocation as asset managers assess opportunities and conduct necessary due diligence.
Your risk appetite will determine the kinds of asset managers, strategies and sectors you should explore. For example, a low-risk approach may involve a focus on mainstream large-cap funds, whereas a higher-risk approach may involve more venture capital investment.
It's not uncommon for managers to offer new funds to trusted investors who they have existing relationships with. Therefore established manager relationships are critical when sourcing private equity opportunities.
Due diligence is another important step. There are limited opportunities to make changes after your initial private equity transaction. This means it is vitally important to undertake due diligence on operational, legal and tax issues before making a commitment.
We have longstanding relationships with a multitude of highly rated2 managers. We also keep these managers under regular review. We can help you carry out the required due diligence fully and efficiently.
You should consider your diversification strategy carefully, as private equity managers typically hold fewer companies in their funds than listed equity managers do. The number of managers you select influences other factors, including the internal and/or external resources you may need to build and oversee your portfolio. This is important for diversification, alongside other issues such as cost management and resource allocation.
Different managers and funds have varying minimum investment levels. Understanding what these are and when they are likely to be needed will help you design your capital commitment plan. These levels will also play a role in securing your relationships with managers, since these managers will rely on you to have the right amount of capital available at the right time.
Once you implement your strategy, it’s vital to monitor your underlying investments and ensure your portfolio is on the right track. Assessing your liquidity budget and commitment plan on an ongoing basis will help keep your strategy and target allocation in line with your desired position.
Our dedicated team can help you construct an effective governance plan as our manager researchers keep up to date on managers and strategies. We will continuously update you on the latest developments to keep you ahead of the game.
SecondariesThe private equity sector has a well-established secondary market. We can help you identify opportunities in mature private companies.
Venture capitalAt the smaller-cap end of the private equity spectrum lie opportunities to harness high growth potential, while supporting innovative businesses and start-ups. Contact us to find out more.
Co-investmentsFor large, sophisticated investors, making co-investments with trusted managers can help fine-tune exposures and may enhance a private equity portfolio.
Impact investingWe can help you source private equity opportunities in an effort to deliver on your impact investment goals.
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