Register  
Market ripe for private equity
Thursday, 29 March 2012 11:40am

Institutions deleveraging to shore-up balance sheets is leading to a buyer's market for private equity, according to one provider.

"In Europe alone the banks need to deleverage their balance sheets by 1.5 to 2.5 trillion euros," said Reto Schwager, head of investment solutions, Asia Pacific at Partners Group.

"They have to offload a lot of their private equity holdings from their balance sheets and someone has to buy these."

Speaking at the Adviser's Big Day Out Investment Manager Roadshow yesterday, Partners Group urged advisers to consider the asset class, which has previously been the domain of institutional investors, particularly given its out-performance of public markets.

The robust secondary market in private equity portfolios is burgeoning as a result of the de-leveraging and is creating good opportunities for investors, according to Schwager.

"This secondary market is a big market - it's a US$70 billion market. $70 billion of private equity portfolios came back over our desk in 2011 alone," said Schwager.

"Globally the banks have started to dispose of their private equity holdings but have only sold about a third, so around two thirds are still to come."

The supply/demand mismatch means buyers of institutional private equity portfolios can dictate price as well as pick and choose bits of an existing portfolio in a way that was not possible five years ago, Schwager said.

This approach to capitalising on secondary market value should be part of a relative investment approach whereby commitments by primary, secondary and direct means are evaluated regularly and adjusted accordingly, Partners Group believes.

In 2007 at the outset of the GFC, private equity commitments by Partners Group Global Value SICAV were at 45% in primary, 55% secondary and none in direct. This shifted entirely to 93% secondaries in 2009 and 7% in direct.

In 2011, the firm finished the year with 31% in primary, 42% in secondary and 27% direct investments.

Blogs
Follow the industry experts.
Christopher Page
Christopher Page
Managing Director

Medcraft's appalling speech
I am surprised. More than that, I am astonished, shocked. Last week I was left speechless by the address that the Australian Securities ...read more
 
Benjamin Ong
Benjamin Ong
Chief Economist

Reflation, rotation and the taper
'Tis being my final type (drivel, to some gentle readers) for the year, we'll take a look back at the 2013 that was to seek the lessons ... read more
 
Alex Dunnin
Alex Dunnin
Director of Research & Editorial Services

Women-led companies better for investors
The Australian government end last year released its first Gender Equality Scorecard and while the results are discouraging, a separate ... read more
News Search   
VideoBrought to you by
Market Thinking - A different way of looking at economies?
First, a confession. Mark may have started his career as an economist but he joins this year's panel not as a chief economist but as the head AXA Framlington Asia. This is to the benefit of the audience ... Watch video
The two-speed economy in reverse
James provides a local perspective and explains to the audience why the mining investment boom is an aberration and it is now a 'return to the old normal'. To view James Bond's slides please click ... Watch video
The global and Australian economic outlook
The anchor man of the panel, Saul provides great insights on the domestic economy. And bravely makes the forecast that the Reserve Bank will not cut interest rates this year and that the next move is up ... Watch video
Great unwindings
Bob believes plunging oil prices may extend the stockmarket rally by a year or two and discusses why investors could expect a volatile few months. Overall, he believes we are entering an era of low returns ... Watch video
The major economies in 2015
Is the European economy dead in the water? Is faith on Abenomics waning? Why should investors be more optimistic about the US economy this year? Chris Probyn, the Boston-based chief economist of State ... Watch video
Get it
Daily
FREE to your inbox, get the Financial Standard Daily Email.
Get the Free
iPad app
Download the Financial Standard iPad app for FREE
Industry
Events
MAR
01
MAR
10
Adviser Big Day Out Investment Manager Roadshow-Perth
11
Adviser Big Day Out Investment Manager Roadshow-Adelaide
12
Adviser Big Day Out Investment Manager Roadshow-Melbourne
18
Adviser Big Day Out Investment Manager Roadshow-Brisbane
19
Adviser Big Day Out Investment Manager Roadshow-Sydney
News
Bites

$245 (inc GST) for 1 year
 
 
Copyright © 1992-2015 Rainmaker Group
All material on this site is subject to copyright. All rights reserved. No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
Link to something CxHszlSw