Keynote summaries, interviews and more from the event
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To begin with, Kelly DePonte, Managing Director at Probitas Partners, shares some insights from their survey on the state of fundraising in the industry.
Most were focused on re-ups with GPs where they already had connections with, and interest in forging relationships with new managers was limited. Those that were pursuing new relationships were focused on those that they had previously met in person, rather than those with virtual-only relationships.
Overall, US and European mid-market buyouts were the only sectors that had generated interest for more than half the respondents. Outside of buyouts and growth capital, the most interest lie in special situations and US venture capital.
Emerging Asia took 7 of the top 10 spots in the ranking, with China leading the way, followed by India and Southeast Asia. The interest in the Chinese PE market is strong from Asian respondents, but also from everywhere else around the globe. India and Japan also saw increased interest this year. Outside of Asia, there is also interest in Brazil, Central Europe and Mexico.
Healthcare and technology focused buyout and growth capital funds continued to get the most attention, boosted further by the pandemic this year. On the opposite end of the scale, energy had only been targeted by 3% of the respondents this year, compared to 30% six years ago.
Early stage VC was the strongest focus of respondents. Technology only funds are the largest area of interest, with life sciences and fund investing in multiple sectors following behind.
There is increased, and dispersed, interest in distressed investing than before, despite a large number of respondents actually not investing in this sector. Restructuring/turnaround, special situations and distressed debt take the top spots, with similar proportions of investor attention.
Co-investments continue to be popular, especially among larger investors as they are more likely to have dedicated co-investment programmes.
Europeans are more interested in funds with strong ESG policies, while North Americans are more focused on historical track records. But North America is catching up with increasing interest in ESG, Social Impact funds and fund manager diversity.
LP due diligence practices had bee significantly impacted by the pandemic on the whole. There were also huge differences in due diligence practicies across different regions of the world. Most are not travelling much and aren’t expecting to get back to normal until at least summer of 2021.
The biggest fear for investors used to be being at the top of a market cycle – but this is no longer there due to the pandemic. Their greatest fears revolve around structural features of private equity – top issue being too much money chasing fewer opportunities, followed by purchase price multiples in mid-market buyouts being too high and threatening future returns. Only 27% concerned about the pandemic brining long-term impacts due to recent developments on vaccines and public markets rebounding.
A number of big themes have been brought to the forefront as a result of the pandemic. While some were already trending before, the pace of change has accelerated since COVID-19 and there are more eyes focused on these themes than ever.
Healthcare, technology, financial services, and online services/ecommerce are some of the most popular and repeatedly mentioned throughout the four day of SuperInvestor.
There are also some that take a more opportunistic approach and are continuing to invest those that had not done so well in the pandemic, such as the restaurant sector, with a long-term view that in the post-pandemic world, these sectors will pick back up again.
However, some point out that the rush of new entries in these sectors might not be a good thing. There are nuances within sectors that investors should be aware of before heading in, as we don’t know whether areas that appear resilient now will continue to do so in the long term. It’s not necessarily a case of a rising tide that floats all boats, and investors should select target sectors carefully.
China is a core market for many in the Asia-Pacific region, as it’s the only one of the major markets that has been projected to grow, said Ed Huang, Co-Head of Asia Acquisitions and Head of Greater China and Korea for Private Equity, Blackstone. Their large domestic market is one to focus investments on, as the middle class continues to grow.
Closer to home, there are also reasons to be optimistic for Europe. Europe has grasped digitalisation and tech penetration, while at the same time there is strong indication that private capital will be investing into more ESG and green funds.
ESG and Impact are sometimes used synonymously, but more interest in this field should enable them to be developed into clearer, separate entities, said Giovanni Davide Orsi, Managing Director, Private Equity, Funds at PSP Investments.
However, he also warned that while offers have increased a lot in the last few years, investors should be careful about due diligence and making sure the deals are what they are looking for and the professionals that are doing this has background experience in the field.
Not being able to travel anywhere is a problem when it comes to fundraising. While some have managed to turn this process digital and forged new partnerships, most have chosen to keep working with those they've had a history with.
We need a new system that enables us to do fundraising activities without travelling and deal with indirect due diligence, said Heiko Bensch, Senior Portfolio Manager, Alternative Investments, Ampega Asset Management.
Valuations are high and there is plenty of liquidity in the world. The disconnect between the real economy and the market has been highlighted as a big concern for many investors.
Geopolitics, while often considered by many as a short-term distraction to a long-term plan, can be a real problem for specific regions in the world and, depending on its nature, cause tension in certain sectors more than others.
The pandemic is likely a short-term distraction, so are we losing the long-term view typical of the industry? Be careful about changing your investment strategies and we should stick to our guns.
But what do you do with your existing businesses that are not quite aligned with the macro trends? Per Franzén, Partner and Co-Head of Private Equity at EQT, shared their solution – which is to transform the businesses with technology to make them more efficient, and find more environmentally friendly solutions for their current challenges.
The big lesson leant is that if you’re investing against the trend, it’s harder to future proof the business – so we make sure that we invest into the future right, he said.
It was unanimously agreed by most speakers at the event – the speed of change is coming fast, and investors need to make sure that they’re finding and investing in the new trends and deals of tomorrow, today. Innovation will be a key part of this, and at the same time take needs to be taken to ensure that we’re investing sustainably and responsibly as an industry.
Megan Starr, Head of Impact, The Carlyle Group
Grace Reyes, CEO, TIDE
Jean Schmitt, Managing Partner, Jolt Capital
Michel Galeazzi, Co-Founder and Partner, Evoco AG
More interviews on next page >>
Johanna Barr, Managing Director and Global Co-Head of Limited Partner Services at Advent International
Joana Castro, Principal at Unigestion
James Newsome, Managing Partner at Arbour Partners
Elias Korosis, Partner at Hermes GPE
