TMF Group – in partnership with Private Equity Wire – examines the global Private Equity trends and challenges investors face today.
Featuring regional commentary, and analysis on ESG and technology in PE, TMF Group executives share their insight on the current global private equity landscape. This report, spanning Asia, Europe, Australasia and the Americas, is essential reading for both GPs and LPs alike.
Download the report to learn:
- How innovation is changing the General Partnership/Limited Partnership relationship
- What the future holds for ESG reporting
- Why technology is crucial to PE
“This is a trend that shows no sign of stopping”
Sustainable investment is critical for client portfolios going forward. ESG factors represent a secular trend that is only going to continue to evolve over the next decade and is now a bona fide core element of how institutional allocators assess private market managers.
Howard Eisen, Head of Fund Services Sales for North America, TMF Group, comments: “ESG really is the question of the hour. It is an ethical and existential issue for a growing number of people. The world is now broad and diverse enough such that there are opportunities to make money if you keep ESG factors high, if not at the top, of one’s list of priorities. One thing is for sure: this is a trend that shows no sign of stopping.”
The role of technology
“Technology has certainly made fundraising more efficient”
2020 was arguably a defining moment for the private funds marketplace and technology – or more broadly, digitalisation – helped fund management groups maintain business as usual in the face of extraordinary circumstances. The pandemic accelerated the pace of adoption of digitalisation to support operational activities and technology made its mark in a few key areas, in particular: virtual fundraising, virtual ODD and virtual AGMs.
Anja Grenner, Head of Fund Services Sales for Luxembourg, TMF Group, comments: “One can do many more virtual meetings in a day compared to travelling from city to city so, in that respect, technology has certainly made fundraising more efficient. That’s good for the industry, as private equity continues to mature and industrialise.”
Finding value in Latin America
“This is not a marketplace for amateurs”
Brazil provides PE investors with a real route to LatAm opportunities. When it comes to investing in Latin America’s private markets, Brazil leads the way, but it is a complex tax and banking system.
Mauricio Carmagnani, Commercial Director, International Markets at TMF Group, comments: “This is not a marketplace for amateurs…before planning to invest in the country, asset managers need to spend time to understand the way of doing of business before making strategic investment decisions. The country’s fund market is well developed but you need to have good fiscal advisors to guide you through the best structures when looking to set up an onshore fund.”
Finding value in Asia Pacific
“Innovation in Asia is on the rise”
Asia Pacific’s private market attracted USD117bn in net capital inflow in 2019,
led predominantly by private equity. The big question for the region now, among global investment groups, is where strategic value opportunities might reside in light of the fall in market valuations caused by Covid-19.
Patrice Lo, Commercial Director for Fund Services, TMF Group, based out of the group’s Singapore office, comments: “Innovation in Asia is on the rise in terms of Fintech, which could pique the interest of global asset managers. We might also see a gravitational pull of private debt to support the aviation industry.”
Finding value through innovation
“Fund administration is no longer just about book keeping”
The alternative fund management industry is witnessing a huge rise in the volume and diversity of data being ingested, as technology innovation facilitates firms in their research and portfolio construction activities. This is a golden age of data and analytics as asset managers start increasingly to use digitisation to find value in the marketplace.
Joanne Baudin, Head of Fund Services, TMF Group (Australia), comments: “Fund administration is no longer just about book keeping but helping fund managers and their investors, through technology, manage their investment portfolio, with visualisations and analysis, help manage documents, data mine and explore information with metrics, etc.”
Finding value in ESG – An APAC perspective
“Good performing funds with a clear ESG component to the strategy is a win/win situation”
ESG investing continues to gain momentum and prominence among global institutional investors as they increasingly look to benchmark not only the performance of funds in their portfolios but the impact they have on the world. It is likely that ESG investing could become a mega trend in private markets over the next decade, as private market participants embrace ESG metrics into their investment strategies.
Seamus Fox, Commercial Director, TMF Group (Hong Kong), comments: “In Asia I would say it is still very much an alpha-driven industry. Performance has always been at the top of people’s minds and if they can access good performing funds with a clear ESG component to the strategy, that is a win/win situation for them. There are impact funds that are less alpha-driven and will sacrifice alpha in order to achieve their ESG goals – but for the bigger fund managers, alpha generation is still a crucial factor.”
Finding value in EMEA
“Expect that EU member states will incentivise private market investors”
Can the European Green Deal unlock opportunities for private equity investors? Given the jurisdictional, regulatory and market differences across the 27 EU member states, for private market investors, one of the ways to consider unlocking value is to see what is happening in Europe’s renewable energy sector, which ties in closely with the ‘European Green Deal’ – an ambitious initiative that aims to transition the EU to a low-carbon economy.
Timo Hirte, Commercial Director Fund Services at TMF Group (Germany), comments: “There needs to be more interaction between EU member states to bring green energy to the areas where it is most needed. There is still a lot of room for investment, and need for investment, and I would expect that EU member states will incentivise private market investors. Otherwise, Europe will not reach its Green Deal goals.”
Finding value in the GP/LP relationship
“Keeping investors onside is key for GPs in this environment”
Relationship building has been central to the success of private equity investing, but the impact of Covid-19 has arguably put a strain on the GP/LP dynamic this year. Maintaining strong ties has become more important than ever with the current move towards remote working and the pandemic has arguably brought the LP-favourable/GP-favourable market pendulum into equilibrium.
James Morris, Senior Commercial Director, TMF Group (London): “One of the biggest pressures managers face is comparing performance with past years and fund vintages. Keeping investors onside is key for GPs in this environment, especially if they are aiming to raise billions for new funds.”
TMF offers a full suite of fund administration, investor reporting and special purpose vehicle (SPV) administration services tailored for private equity (PE), real estate (RE), infrastructure, private debt and venture capital (VC) managers.
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