PE & Alternatives Update: Nov 2021

Private Equity and Other Alternatives Markets

Just looking at Q1 through Q3 data, both the number of global buyout deals and the value of those deals have surpassed their previous annual records. The private equity market is hot right now, and it has been since the second half of 2020. But how will it fare in 2022? 

The following papers provide updates on private equity and other alternative assets, including the particularly distinctive Chinese venture capital market, and a primer from Deloitte on central bank digital currencies. 

ALTERNATIVES PAPERS

2022 Global Private Equity Outlook (Dechert)

This collaborative report looks at whether the private equity market will remain just as hot in 2022, given some of its potential headwinds. It is based on an international survey of 100 private equity executives.

Impact of Subscription Lines on PE Funds (BlackRock Institutional, Sep 2021)

For compliance reasons, this paper is only accessible in the United States

Subscription lines of credit are loans taken out by private market funds that enable the fund manager to make investments quickly without the need for irregular capital calls from the fund’s investors. BlackRock, in collaboration with Technical University of Munich (TUM), studied how subscription lines can impact private equity fund performance. The research suggests that subscription lines are more useful as a portfolio management tool that simplifies the operations of both the fund manager and its investors, rather than as an instrument to boost performance and obscure performance evaluation.

The Case for Investing in Broad Commodities (WisdomTree Investments, 2021)

For compliance reasons, this paper is only accessible in the UK & Europe

WisdomTree Investments provides a primer on commodity investing, clearing up common misconceptions, and discussing some of the complexities behind both physical commodity investing and commodity futures contracts.

Direct Lending: How senior is your debt? (Federated Hermes, Oct 2021)

For compliance reasons, this paper is NOT accessible in the United States

Are investors being adequately compensated for leverage, cov-light documentation, and subordination in private credit markets? Federated Hermes puts forth a framework for direct lending analysis in private credit.

The Next Phase for Private Credit Markets (M&G Investments, 2021)

For compliance reasons, this paper is only accessible in certain geographies

M&G Investments reports on private credit's potential role in the post-pandemic recovery, the current private credit landscape, and challenges in private credit markets over the next decade.

PE Co-Investments: Targeting value amid higher valuations (Manulife IM, Nov 21)

For compliance reasons, this paper is only accessible in certain geographies

Manulife Investment Management reviews the market for private equity co-investments, suggesting that aligning with proven sponsors that have a specific expertise can be an attractive source of returns.

China Private Equity and Venture Capital: Too big to ignore (Mercer, 2021)

When investing in Chinese private equity or venture capital, it is necessary for investors to consider geopolitical, regulatory, and other country-specific risks, making the environment more complex than developed market pe/vc.

Central Bank Digital Currencies: The next disruptor (Deloitte, 2021)

Deloitte discusses some of the design considerations for CBDCs (central bank digital currencies), their potential impact on the commercial banking market, and other related issues.

UPCOMING WEBINARS

Webinar 1 Dec 2021: Private Markets – A Silent Revolution (State Street)

In addition to the data required to report on new and existing investments, data management and data analytics are becoming crucial elements of private market investing.