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Alternative investments are an increasingly important asset class within portfolios to meet investors’ twin needs namely to generate returns and manage risk
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High Interest rates a disruptive change in the Private Equity landscape
One of the best things for the industry over the past 12 years is that rates have been at very low levels, giving it a considerable boost. Many businesses have found it easier to make money because of this. Declining interest rates increase the capital available to private equity businesses as investors shift their focus away from fixed income and credit instruments. So how will high interest rates disrupt this?
The Rise in Private Equity allocations: Crowded Fundraising market forecasted in 2022
Currently, every investor class desires to increase their allocation to private equity to pursue yield. However, a crowded fundraising market in 2022 gives the advantage to the fastest returning managers, while others doubt how long the celebration can endure.
Indirect Impact of Ukraine crisis on Private Equity portfolios
Asset managers and institutional investors have been quick to announce their divestment from Russia in response to the country’s invasion of Ukraine – some to comply with ESG standards, others to avoid sanctions.
ESG remains relatively underappreciated as a value creation lever for the private equity industry
For many institutional investors, having a solid ESG profile is a requirement. Most have committed to one or more international initiatives, such as the Principles for Responsible Investment or the Net-Zero Asset Owner Alliance, and thus must invest in or finance companies that adhere to those commitments. The ripple effect extends to middle-market private equity and private credit firms and their present and prospective portfolio companies.
With more private equity capital available than ever before, another boom year is expected in 2022
Private equity dealmaking and fundraising is forecasted to remain robust in 2022, while midmarket managers in the United States and Europe are wary of high valuations and inflationary pressures as they deploy record amounts of capital.
The booming secondary market in Private Equity an additional gateway for Luxembourg
Individual LPs (investors) can only exit early their private equity interests through the secondary market. In brief, secondaries allow investors to sell their positions in private equity funds and hence liquidate equity stakes in private companies. Due to the illiquid nature of private equity, the establishment of a secondary market was necessary and perhaps inevitable.