Overview
During this session, Partner Luc Jansen moderated a panel that provided an overview of the current fundraising market and offered insights into which strategies are yielding successful outcomes.
Session panelists included:
- Brad Fisher, Managing Director, Private Investments, Thrivent Financial
- Marc Lohser, Managing Director, HQ Capital
- Brendan Pack, Managing Director, iCapital
In Depth
Key takeaways included:
- Despite current market conditions, institutional investors have tried to be consistent in terms of the deployment of funds, while adjusting in process and strategy to be more selective and thoughtful in the allocation of funds. In terms of strategy, the conviction behind investments has remained. Consistency has resonated across the space, however, institutions have opted for a more tactical approach, sticking to funds’ main sectors and remaining opportunistic when the right situation arises. Some institutional investors might reduce allocations to private equity as their private equity portfolio has grown when compared to their public equity portfolio given that stocks are down significantly.
- Deal flow has remained fairly consistent, but there has been a shift inward to a focus on improving current businesses and platforms, leading to an increase in secondary transactions and add-ons to increase earnings before interest, taxes, depreciation and amortization (EBITDA) organically.
- The current market presents a challenge to fundless sponsors and new managers. Investors have gravitated toward well-established funds with a demonstrable track record of success. This has been especially reflected in the healthcare private equity space, where it has become more important than in any other sector to have industry expertise.
- The healthcare sector continues to be a main focus for institutions, with heavy interest on healthcare technology sparked by COVID-19.
- Institutions have increasingly used technology to improve their investment process as advancements have allowed them to store and use information in more diverse ways, increasing the ability to better source investors and opportunities and better evaluate deals and how they fit into current portfolios. However, on the co-investment side, things remain an extremely relationship-driven business.
- High-net-worth investing in private equity might not change or even pick up now that public equities are lower in value and high-net-worth investors are seeking yield elsewhere. Also, private equity sponsors might be more interested in high-net-worth capital since some institutional investors are pulling back.
