At a time when institutional investors are increasingly turning to their private equity allocations to manage volatility and seek long-term returns, new long-dated private capital strategies are emerging as a new asset class.
Long-Term Private Capital in Institutional Portfolios
Long-term private capital (LTPC) strategies mitigate some of the structural limitations of traditional private equity approaches, focusing on economically durable assets that can be held over longer horizons, such as 15 to 20 years.
In partnership with IFM Investors, we are pleased to host a webinar to discuss the role of LTPC in institutional portfolios.
Transcript (with timings)
2:06 – Long-Term Private Capital (LTPC) is focused on economically durable operating assets
3:56 – Companies that have been through multiple private equity firms are good candidates for a LTPC strategy.
7:08 – How an LTPC strategy compares to listed equity markets.
8:20 – Some sectors that are better suited to an LTPC strategy than others.
9:03 – The advantages and disadvantages of a longer time horizon than traditional private equity.
12:21 – What sort of assets fit best with the LTPC timeframe?
13:55 – Why would businesses move from one private equity group to others?
15:21 – Despite the longevity, a manager still needs to be actively managing and delivering returns.
19:07 – A majority stake is not necessary.
21:12 – Traditional buyouts aim for 20% return, so the key levers tend to be operating case and leverage. Australia is a little different to other markets in how they handle these.
23:02 – How high would the leverage levels go?
26:16 – Where should institutional investors take the allocation from?
30:35 – LTPC is able to have a greater impact on governance than traditional private equity.
35:01 – The liquidity profile can be a challenge for a long-term portfolio, but you are able to divest in some circumstances.
37:53 – Some companies are staying private for longer and that has certain advantages.
Jeremy Larkin, Executive Director, Private Equity, IFM Investors
Wouter Klijn, Director of Content, Investment Innovation Institute [i3]