PGIM’s Hyat: This Is a Learning Moment for Retail Investors
PGIM COO Taimur Hyat joined Jonathan Ferro on "Bloomberg The Open" to explain why the shift into private markets by retail investors has been a learning moment.
ZUG, Switzerland, 15 Nov. 2022 – Montana Capital Partners (“mcp”) has published its 10th Annual Investor Survey, titled “The role of private equity in volatile times — how leading investors respond to the new market environment”, which explores the current investment strategies and preferences of global private equity investors, including large institutional investors and reputed family offices and foundations.
Allocations to private equity have surged in 2022 amidst decreasing public market valuations, rising inflation, and geopolitical conflicts. The survey finds that 71% of family offices and foundations and 33% of institutional investors now allocate 15% or more of their portfolio to private equity, a significant increase compared to 49% and 21%, respectively, in 2021.
Increased allocations are a result of the strong performance of the asset class and a fundraising environment that has seen general partners (GPs) come back to market faster than ever and forced investors to accelerate their deployment. Meanwhile the “denominator effect” has meant that for 8 out of 10 respondents, private equity portfolios have maintained their value or increased during the first half of the year, while stock markets plummeted.
To navigate the current market environment and mitigate the impact of a potential recession, investors have turned to resilient industries such as healthcare and business services, and investment strategies expected to be less impacted in a downturn, such as mid-market buyouts and secondaries.
Secondaries are the No. 2 long-term strategic preference of investors behind mid-market buyouts and ahead of growth capital, venture capital and private debt, among others, with a preference for complex secondaries and fund portfolio acquisitions. With a quarter of institutional investors expecting to sell positions in the next 12 months, we can expect to see attractive investment opportunities in the near term.
Marco Wulff, managing partner and CEO at mcp, commented: “While it is currently more difficult to identify and create value and there are elevated market uncertainties, we also see heightened interest in and attractive opportunities for secondaries. We believe that we will be able to generate alpha by partnering with the right GPs and by taking advantage of the market correction to invest in assets with strong fundamentals at lower valuations.”
Eduard Lemle, managing partner at mcp, added: “Secondaries are expected to perform well in the current market environment, as some LPs may be willing to accept a higher discount in exchange for immediate liquidity, which will create attractive buying opportunities. Secondaries are also an attractive complement to regular primary and direct private equity allocations, due to their high level of diversification, reduced blind pool risk, and earlier repayment of capital.”
The 2022 Annual Investor Survey represents the 10th edition of a successful series of yearly comprehensive studies on the global private equity market conducted by Montana Capital Partners. It is based on two parts: an online survey of more than 60 of the industry’s leading family offices and institutional investors worldwide during the months of August and September 2022; furthermore, a subset of these investors were interviewed in depth to provide further insights into the results. Throughout the report, family offices, multifamily offices and foundations/endowments are classified as “family offices and foundations”. Investors from insurance companies, pension funds, banks, asset managers, and sovereign wealth funds are classified as “institutional investors”. The full report can be accessed via the microsite for the Annual Investor Survey.
Montana Capital Partners (“mcp”) is a Swiss-based private equity firm focused on attractive niches of the secondary market, as well as on high-quality asset management solutions. mcp acts as advisor to five secondary funds with total assets under management of more than €3.4 billion (US$3.5 billion). All mcp funds were oversubscribed and closed at their hard cap.
The firm focuses on directly sourced transactions to create innovative and customized solutions that mutually benefit investors as well as sellers and GPs. Such solutions include structures like deferred payments, earn-outs, preferred equity and securitization elements, as well as tailored solutions for GP-led transactions such as tender offers, continuation funds (either entire funds or single/multiple assets), spin-outs, and stapled transactions.
In 2021, mcp joined forces with PGIM to strengthen its market positioning and global footprint. The firm benefits from PGIM’s global network and expertise, while providing access to a new and differentiated investment opportunity to PGIM’s clients. For more information visit www.mcp.eu.
PGIM is the global asset management business of Prudential Financial, Inc. (NYSE: PRU), a leading global investment manager with more than US$1.2 trillion in assets under management as of 30 Sept. 2022. With offices in 18 countries, PGIM’s businesses offer a range of investment solutions for retail and institutional investors around the world across a broad range of asset classes, including public fixed income, private fixed income, fundamental equity, quantitative equity, real estate and alternatives. For more information about PGIM, visit pgim.com.
Prudential Financial, Inc. (PFI) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom, or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. For more information please visit news.prudential.com.
For media use only. All investments involve risk, including the possible loss of capital.
The comments, opinions and estimates contained herein are based on and/or derived from publicly available information from sources that Montana Capital Partners believes to be reliable. We do not guarantee the accuracy of such sources of information and have no obligation to provide updates or changes to these materials. This material is for informational purposes and sets forth our views as of the date of this presentation. The underlying assumptions and our views are subject to change.
References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. The securities referenced may or may not be held in the portfolio at the time of publication and, if such securities are held, no representation is being made that such securities will continue to be held.
In the United Kingdom, information is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 193418). In the European Economic Area (“EEA”), information is issued by PGIM Real Estate Luxembourg S.A. with registered office: 2, boulevard de la Foire, L-1528 Luxembourg. PGIM Real Estate Luxembourg S.A. is authorised and regulated by the Commission de Surveillance du Secteur Financier (the “CSSF”) in Luxembourg (registration number A00001218) and operating on the basis of a European passport. In certain EEA countries, information is, where permitted, presented by PGIM Limited in reliance of provisions, exemptions or licenses available to PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. These materials are issued by PGIM Limited and/or PGIM Real Estate Luxembourg S.A. to persons who are professional clients as defined under the rules of the FCA and/or to persons who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II).
+49 (0)69 244 341 730