Last month, SS&C co-hosted an Alternative Investment Funds Reception at the London Residence of the Ambassador of Luxembourg, hosted by His Excellency Mr. Jean Olinger, Ambassador of the Grand Duchy of Luxembourg to the Court of St James’s in Great Britain. I spoke on a panel discussion about the Future of Alternative Funds explored various economic, political, legal and commercial considerations. Anexcerpt of the panel discussionis available online.
PE is less of an alternatives asset class today than in previous years and has increasingly become mainstream as investors leverage PE as one of the investment classes to tap global growth patterns. PE firms give a good exposure to global growth given the range of portfolio companies they invest in and their underlying supply chains.
The industry stands at $6 trillion in AUM globally, and last year alone, PE firms raised close to $1 trillion inclusive of co-investment structures. Approximately 30% of global PE capital is raised in Europe and 70% of the amounts raised in Europe go back to the US as that is still the largest concentration of PE firms. A dollar raised in Europe is more expensive than funds raised elsewhere because of the cost of compliance with heightened European legislation. Furthermore, many investor pools are now coming of age in Europe, which provides PE firms a fertile ground to broaden their LP net.
On the question of market maturity, private equity’s net asset value has grown more than sevenfold since 2002—twice as fast as global public equities. When such growth happens, interest levels and understanding of the asset class enhances. With enhanced interest, an ecosystem starts maturing around the industry. The industry reveals rapid development in its structures and behaviors—a rapidly developing industry now offers many ways for investors to customize their exposure.