Senior Conference Producer Kate Roberts highlights the top 4 considerations for private equity in 2017 following her research ahead of SuperInvestor 2017.
Having taken an 18-month break from the industry (globetrotting – thanks for asking), it has been fascinating to see some big changes and developing themes in private equity. Here are four of the biggest:
Private Equity, nimble, disruptive and opportunistic
In 2016 the world demonstrated that it was a rather unpredictable place. The rise of populism, protectionism and economic nationalism as well as festering discontent with global urban elites poses many potential threats to managers and their investors.
Private equity came through the past crisis relatively well, and the industry loves dislocation, so where will the opportunities be found this time round? Who will identify and exploit microeconomic themes. And with valuations at a record levels and lots of dry powder to deploy, how are managers going to make any decent return at all?
Should investors be pulling in their horns, and if so, when?
Disruptive technology and you
With more managers hiring talent in the technology space specifically to digitise portfolio companies, disruptive technology has been embraced by the private equity industry. Technology has also been an investment theme for many years, but what about disruptors to the private equity model itself?
"There is no reason why the analogue model of...LP/GP relationship should be immune from fintech innovations"
Fintech has profoundly disrupted the financial services and asset management space, but what of alternatives? There is no reason why the analogue model of, for example, the LP/GP relationship should be immune from fintech innovations and by the time of the conference in November we may have more idea as to what this could look like. What about a fintech firm that identifies and due diligences investment opportunities, and crowdsources the capital? Anybody?
Private equity 2030 - will we even recognise ourselves?
OK, assuming we all survive the wave of technological disruption which is almost certainly on its way, what will private equity look like in 2030?
Co-investments and directs, new fund structures, fund families, long-term investing, increasing access to meaningful data points, explosive growth in secondaries and private debt, the blurring of lines between asset classes, management company liquidity, enhanced transparency…
LPs and GPs are innovating to find efficiencies in the way they partner, find value and generate returns. Are these trends leading to grater alignment of interest? What skills can GPs bring to the table that LPs cannot do for themselves? How will the industry adapt to manage inherent conflicts of interests arising from some of these developments?
The rise in populism or are you are all bankers’ now?
With the rising mistrust of and indeed scorn for the urban elite in many developed countries, should the private equity industry be concerned? How will the interplay between politics, economic nationalism and the regulatory environment impact the freedom to operate, if at all? Should the industry be engaging in a more intelligent way with the man in the street, and if so, what could that look like?