📢 Webinar from Funds Europe (Mercer Investment Consulting x IPEM).
🤩 Featured Speakers
🎙️ William “Billy” Charlton, PhD
Global Head of Data Analytics and Research, Mercer Investment Consulting
🎙️ Antoine Colson
CEO & Managing Partner, IPEM
🎤 Moderated by Nick Fitzpatrick, Editor of Funds Europe
🔍 Key Topics Explored:
– Reflecting on the Game-Changing Events of 2023
– Markets & Liquidity: Is 2024 a Private Credit Dream?
– Navigating the Changing GP/LP Landscape
– The Retail Opportunity and its Challenges
This insightful discussion provided valuable insights into how GPs and LPs can strengthen their investments and relationships in the coming year.
Good morning or good afternoon wherever you are in the world this webinar this webinar is now live I’m Nick Fitzpatrick the editor of funds Europe magazine and today we’re going to speak about private markets 2023 to 2024 the flight to Quality so fund managers have been steering through a fundamentally
Different environment than the one they had become accustomed to for the last 15 years according to the 2024 Global private Equity Outlook by law firm DEET central bank rate tightening to tackle inflation poses severe challenges for the PE industry with higher rates impacting deals and therefore transaction activity there also been
Lower distributions from fewer exits which is affecting fundraising efforts the report says so against this backdrop we’re going to explore the private markets outlook for the year in front of us and how this was shaped by the year just behind us this webinar is in partnership with IPM can
2024 no doubt you know this is the Premier private markets event and this year it is going to be held on January the 23rd to the 25th I’m delighted to welcome my two guests who will reflect on how events in 2023 could mean reduced levels of Leverage and higher standards of
Sustainability are likely to Define portfolio shifts in the year ahead in other words perhaps how this year could see a flight to Quality so joining me are William Billy Charlton PhD he’s Global head of data analytics and research At Mercer investment Consulting and Anan Coulson chief executive of IEM
Welcome to both of you thanks M thanks so uh Billy Billy’s joining us from Richmond Virginia and Anan from Paris I’m in London we’ve got bad weather all around but we hope the the lines will uh stabilize and give us a a good Sol 45 minutes I just say to the
Audience that you can ask questions at any time you should see the questions icon uh somewhere on your on on your screen and just know that uh questions are completely Anonymous even we can’t see who you are or what firm you you’re from and we’ll try and answer as many as
We can as we go through this so Billy and Antoine we’ve got quite a lot to get through the next roughly 45 minutes we’ll start with the macro backdrop in a moment but we’ll also intend to liquidity whether the current environment is a boom for private credit the changing GPL LP
Landscape and the so-called retailzone this year yeah I think the big change in 2023 was just the lack of exits uh we the co you know the follow through on Co finally caught up the private Equity industry a little bit uh we had very active markets 2122 even into the
Beginning of 23 but the lack of IPOs and the lack of Acquisitions in 2023 was really difficult um result of that is that some investors some private Equity investors are slowing down their investment Pace a little bit so we’re seeing that Peak through into the fundraising cycle where fundraises were
The one and Ds are kind of done we’re not seeing that happen as much anymore we’re seeing uh people dragging out the fundraising six nine months instead of a couple months so it’s the the the lack of exits lack of distributions is feeding back into the fundraising cycle
As well so that that to me one of the big changes in 202 andine do you agree do you see anything else sure I mean the lack of exit was clearly the bottleneck of for private markets this year and I think that’s something mostly explained by the high level of
Uncertainty uh we’ve seen uh both in markets in the economy and the political and geopolitical uncertainty and there’s something investors don’t like in public markets and in private markets it’s that level of uncertainty uh how rates will evolve how inflation is evolving uh has a deep
Impact on you know uh valuations on the cost of capital and that’s the main reason also why I think we haven’t seen that many exits and deals this year is because the the bid and ask spread was hard to to meet uh and as long as valuations haven’t really clarified this
Will have a strong impact we’ve seen that especially with VC in Venture Capital uh some you know late stage grow deals valuations have have been 40% discount discount uh and it had also an impact on buyout transactions because the price Discovery process was I would say Earth plus the availability and cost
Of of Leverage as well so this high level of uncertainty had had a strong impact last year and there’s some reasons to you know uh to believe it will be the case in the next few months again and I guess you know talking about valuations price discovery of course one
Problem or one you know change uh from a regulatory point of view certainly here in the UK where I am is of course this issue of pricing uh private markets assets um because of course these prices do not change very very fast do they and
I just want to ask you know I know we mentioned this in the previous discussion this uncertainty in actual fact in private assets there there is a degree of certainty because the prices don’t change that quickly is is that a good thing or a bad thing and Billy I’m
Going to perhaps come to you on that F yeah a couple things about that uh we put a paper out a little while ago that talked about how um after the GFC for example a lot of people were afraid that private Equity managers would call Capital a quickly because of the
Discount prices and to Antoine’s point that that did as spread stays around for a while and what we found was they actually cut back on their their Capital calls by about 35% for for two years after the GFC until that price Discovery mechanism kicked in again uh one of the
Things interesting enough with seeing now is the valuations at least on the E multiple basis are actually still pretty high um and what’s happening is we talked to our managers is that the better deals are getting done so they’re still priced fully whereas the mediocre or the the deals with more uncertainty
Are not getting priced so interestingly enough prices stay high a little bit because of the quality of deals that are are we’re seeing through the the pipeline um and it does take some time for those those assets that aren’t as high quality to reset their expectations
On pricing which is why you end up with a de flow drop in times like these I mean antoan you speak to a lot of PE firms Etc I mean do you think private markets are less distracted by noise and therefore perhaps less distracted by uncertainty it’s uh By Nature you know
The fact of being liquid or being long-term is supposed to to lead GPS to be less distracted by you know Market uh Evolutions uh but you have to be to be fair public markets and private markets are still uh quite connected uh especially uh for I would say for two
Reasons first the mark 2 Market thing is something uh that needs public markets so that that has an impact obviously on on valuations and second because it’s it’s an alternative for for allocators public markets are Equity Expos Ure for private Equity investors as well so there’s competition and I think also it’s something
New that private market fund managers were not used to in the last five years is the growing competition of other asset classes that were seen before as irrelevant compared to you know the high returns private markets were delivering so that’s using when you can deliver 4% risk-free on a 10year treasury that’s
The level of the water so unless you’re delivering that level more to your investors you’re clearly competing with other asset classes that has had an impact I think as well on private markets and allocations I don’t know what B thinks of it but I think it’s
It’s yeah we we definitely seen some of that with that higher interest rates all of a sudden you know it used to be considered uh you know basically risk-free with zero for a number of years um and so the capital was attracted to private markets because of
The higher return rates but with the interest rates going up all of a sudden Anon Viewpoint all of a sudden it becomes not as clear of a decision um so we are seeing some allocation although we are still seeing investors increase allocations we’ve got one investor that
Client I work with that has a 30% allocation to private markets for example it’s a Healthcare System that’s done very well um so we are still seeing a lot of interest there we’re still seeing people come in we are seeing um some investors kind of pace slow the pace
Their program down right now but they’re still investing right okay thank you um just you know two of the biggest conversations in private markets over the past year or two I guess have been on the one hand the democratization of private assets which will come to in a
Little while but also of course the rising profile of private credit so I mean I know Antoine I think you would forward the idea that 2024 is going to be so-called private credit dream why do you think that well I remember last September at ien Paris Steve schartman the founder of
Blackstone was on stage and said something like when you can make 12 133% a year with almost no no risk of loss what else can you do in life something like that and I think uh that clearly clearly illustrates you know the the competition I was I was mentioning
Uh these are private Equity or Equity like returns with you know yield delivering Securities uh and a good risk return profile so that’s something that I think explains a lot the growth of private credit uh together with something everyone knows you know the fact that banks are have withdrawn
From large parts of the credit of the credit Market but it’s a in fact this private credit space is now 1.4 trillion Market it almost doubled in in three four years and it’s poised to do the same in the next few years as well by by the situation we are
Discussing thanks I mean if we just ask you before we move on perhaps if one of us isn’t speaking we might mute just because there’s a little teeny bit of feedback and let’s just see if that possibly works at least I’m getting the feedback um okay but
Billy I mean are not some credit and transparency risks to consider though with private credit I mean I mean yes there are but particularly transparency I I I recently read a pin Co Executives apparently warning that the industry may not be regulated enough and that this is
A cause for concern if more credit risks transfer from Banks to the likes of Pension funds insurers what do you think to that Billy a couple comments I think one of the interesting things is the reason it may be less regulated now is because of The Regulators uh when they
Started squeezing banks on their loan portfolios uh a lot of what would have been financed in under a bank label was now financed in private cred private credit private debt um a couple things about that I think one of the things i’ I’ve always admired about private markets has been the alignment of
Incentives between the investors and the LPS and the private debt is the same way uh they have every incentive to make sure that those loans that they’re negotiating are paid off and paid off as expected so so you get much more close to the alignment with the LPS than you
Do necessarily in in a bank situation I so they can’t you know a private credit team cannot plan on raising another fund unless they do well with the existing fund so that I like I like that alignment a lot now in terms of Regulation yeah there there’s less
Regulation than it would be under a bank structure however you see in terms of the individual LPS you see exactly what they’re investing in you have a lot of in direct information on that loan that you may not have under a bank label as well so I think there there there are
Pluses and minuses on both structures um I personally favor the private Market structure over a large public Bank structure great thanks I mean Bill I’m going to stick with you um I mean obviously of course we we’ve met before this is not the first time we’re meeting
And I know you forward the view that quote DPI is the new I IR internal rate of return I mean these are both measures to try and gauge the rate of returns for investors I wondered could you explain more what is what does DPI stand for got
To admit it’s slit my mind distribution is the paid in capital so it’s how much money you’ve received back from the fund manager versus how much you’ve invested in that fund manager or they’ve called and that fund is called um one of the things about IR that’s always bothered
Me is is IR the vagaries of it are pretty large especially in a private Market setting um you know an IR under fre years typically is not reliable there there there’s too many swings that can be made in that and too easily manipulated um usually I tell people I
Suggest to people that uh you know when you get the years four and five IR becomes reasonably stable but not in in years one through three um DPI on the other hand is is the measurement of how much Capital you see received in so it’s it’s something that’ve gotten in your
Pockets it’s a known quantity it gives you an idea of the ability of the fund manager both to invest and exit now one thing about DPI is it varies quite a bit by the asset sub asset class so a buyout I DPI is not going to be comparable to
DC DPI uh usually VC especially early stage is going to be much long Horizon so your DPI doesn’t kick in till year five six seven uh versus a private credit is a great example the DPI for private credit fund is going to be much higher because they’re paying out the
Interest payments that they’re suing so you really have when you look at DPI you really have to pay attention to what what the peers of that same asset class arew number basically the DPI is a much more fixed certain number it’s a hard number as opposed to IR which is a little bit
More vague yeah an irr you can you get into situations where you can manipulate by using credit lines for example if GP is using credit lines it changes the IR um if they play games with valuations that can become a little bit problematic because that’s not realizations in your
Pocket that’s just the valuation metric so um generally GPS aren’t don’t do that so that’s not usually an issue but it it DPI is a certain measure for what you’ve got back from that that GP and why what why sorry do you kind of make this raise this issue now I mean do
You think that this this is going to be a significant change in the year head about how investors you know measure their their returns how other Investments are doing yeah I think so I think one of the challenges as we started off this discussion is the exits have been
Challenging this past year and so GPS that are able to exit now and generate returns to their investors are demonstrating quite a bit of quality um so it’s that is a challenging environment right now okay on that point um Antoine how how do you sense people feel now about the exit environment
Yeah just to to Bill Point um the other saying in the industry that you can’t eat IR so DPI is is Cash distributed to investors and to distribute cash you have to exit uh your positions and that’s exactly where the bottleneck is right now uh the exit levels are now at
Their lowest in 10 years uh in private markets overall uh so there there’s clear pressure from LPS to get more cash back uh distributions uh if uh even more if they’re asked you know to commit to the to the next fund uh to the next fund raise and that’s something clearly of an
Issue for the industry if it’s not Distributing cash back to their um to their LPs they will struggle raise the next the next fund so that’s I think where the pressure is at the moment uh and it’s even more pressing that some exit routes are clearly closed or hard
To tap like the IPO market for VC and growth are clearly uh in a bad shape and many IPO plans have been withdrawn in the last few months so unless you know there’s more clarity in that in that sense uh distribution will be still hard
To uh to send over to to to lpce so that’s why Al GPS are exploring new exit routes or liquidity options uh as as they say so obviously the continuation fund uh narrative uh has been quite important in the in the last few months I don’t know if Billy uh has been active
In that space monitoring that some these also have been partially exited that’s something else you know where you don’t exit the full position but only partially na financing andure you know these tools have been used by GPS as well to leverage on their portfolio or some assets to to send money back topce
So I think clearly exit is the key one thing to monitor right now so I mean Anon perhaps a bit more on this you know given the exit environment is there a need for more creative liquidity Solutions I mean my perception for example is the secondaries Market is
Coming more and more into play yes so the C liquidity Solutions are mostly provided by the secondary Market uh there are liquidity options first for LPS uh and I think the market has been quite active we’ve seen some large uh LP portfolios being you know acquired by secondary players uh and that’s
Something that’s grown of importance we’ve seen also large secondary funds being raised uh Lexington Partners just closed the 25 ion fund last last week I think uh so LPS are first looking for liquidity options themselves and then GPS are provided this liquidity Roots by uh innovating in a way by first
Continuation funds is something and and now financing another of these of these tools as well Billy I’m gonna perhaps ask ask you about this too but before we get you to answer just a couple of people have messaged that that they’re hearing you they’re hearing you that’s great but
Just a little bit quieter just wonder if you could possibly adjust your microphone in some sense and um let’s hope but you are being you are being heard that’s the main thing um yeah so I mean Billy same more or less the same question you know creative liquidity
Solutions um GPL Le Solutions perhaps how do you see this developing over the past year or so over the next year or so yeah I think those are still going to be strong I mean right now GP lab uh secondaries represent about 50% of the market so they’re a very large chunk of
The market now and I think it’s actually a very interesting development one of the things I you know farther back in my life I was an academic and one of the things I enjoyed about watch studying was seeing how markets develop and this this development of continuation funds I
Think is a great example of how markets uh work to solve problems uh the you know it’s going to be interesting to see long term what the performance of the GP lead secondaries is compared to regular SE uh you might want to think that because you’re only financing one or two
Companies um that you’re picking from the best of the portfolio and you may have outperformance in that vehicle um certainly the GPS have an incentive to make that work the what I was surprised at was that according to our folks the work on continuation Vehicles only about
30% of the LPS roll over into the new vehicle most of them choose the Liquidation option which it’s a bit surprising to me given that you’re already you know it’s as opposed to one of the challenges in private Equity is it’s used for blind tool investing you
Don’t know what you’re going to be investing in and nice thing about continuation vehicle is that property has been in that portfolio for quite a long time so you know a lot about it so you take away that blind pool investing aspect of it but so I was surprised more
LPS aren’t rolling over but to to Enon Point earlier I think a lot of LPS are looking for distributions so a lot a lot of them are looking for realizations and you usually a continuation vehicle is done towards the end of a life of a fund
So you may have been in that company 8 nine 10 years already and so there is somewhat of a of a issue about continuing to own that asset for that long a secondary issue is that many LPs are not structured to to take individual company risk in other words if you think
About it it’s sort of like a co-investment situation where you’re underwriting the GP on the specific asset and some LPS just don’t have the re intro resources to feel comfortable with rolling an asset like that over and taking the risk of that so they’d rather
Do it as a as a blind pool than a known pool yeah I agree with Billy I think it’s um it’s a very interesting Innovation and in a way kind of creating a another uh strategy or asset class within within the market I’ve seen some LPS uh taking direct you know positions
In um in some continuation vehicles uh because these vehicles are in a way another approach to co investment uh potentially and so I think it’s it’s clearly becoming mainstream uh we’ll be releasing our annual private Equity survey at IPM next week but just to tease one finding of discontinuation
Vehicles it’s not the third uh most uh explored exit option for GPS and it’s explored by more than a third of GPS European GPS would cont plate continuation funds together with uh corporate strategic you know sell and uh sell to another private Equity Firm which means it’s clearly becoming
Mainstream thank you yeah thanks I’d like to stick with the GP and LPS um just before we just before we do though just a reminder to the audience you can ask questions at any time I know we’ve had a couple of questions on very specific asset classes to be honest I
Don’t think I’ll fill them to our speakers here because I think talking about Japan or shipping for example might be beyond beyond the range of this conversation so apologies to those but if you’ve got members of the audience but if you’ve got any questions about the issues we’re dealing with uh very
Much the macro stuff or uh distribution uh Trends in liquidity Etc or comments do do uh pose them to us we’ll deal with as many as we can so look andan sticking with you for the next topic the changing a gplp landscape um is going to be a key
Talking point at the K’s conference this year why is that for all the reasons we’ve uh We’ve commented on the the micro environment and how hard it is now uh to exit distribute and raise uh Capital uh I think there’s now a two-sided market we’ve seen some very successful and
Large fundraises this year uh Canon link mention CVC T associate B capital sinen last week or pii Clos closer to to home here in France uh but doesn’t mean these large and successful fundraise did not take longer and were not harder than before and actually it was the case for for
Many many of them so even the best firms have been struggling raising Capital uh this year so imagine for new entrance for Less experienced GPS or GPS that have um not the top quality track record how difficult it is and so that’s something explaining I think why the
Market is is taking different different directions this leads also I think to the consolidation Trends we’ve we’ve seen uh just this morning General Atlantic announced the acquisition of Actis an infrastructure player uh last week was a Black Rock uh acquiring um Global infrastructure partners and and we’ve seen many of that type of
Transactions you know vandel by I sopin NOA being invested by Apollo I cannot count them all there there are so many and I think there’s clearly a move towards uh platform asset managers in private markets uh towards consolidation where probably in the next few months or years you will see
Large Global platforms covering different asset classes and very Niche highly expert GPS covering some verticals on their own but that’s something I think very um very important at the moment that’s that’s motivated by the the difficult the difficult context plus some players are playing I think an interesting role
In that consolidation the the G GP stake uh investors uh have been quite active in the in the last couple of years and I and I think are continuing building their position and and helping the market consolidate don’t know what Billy thinks of this this movement if it’s something positive or not for
Clients you know it’s a good point I think um whether it’s a good idea or not it’s happening um and it’s what it’s an evolution of the market like you touched on earlier with the GP secondary uh whether whether it’s good or not I think it take some time to see I think
One of the things driving a lot of this has been the pressure on Fe structures and that has always been one of the challenges in private markets is the the Fe structure being as high as it is and so this consolidation obviously one way to for that to to to lower the fees
Especially spread it across our larger asset base um so as long as G LPS are pushing on feeds then the consolidation I think continues I do think there’s um some issue with where it consolidation works better than others so for example I don’t know that consolidating Venture
Capital funds is going to work very well um but some of the larger platforms buyout funds that makes a lot of sense to me um but the the smaller funds the smaller um areas where people are really betting on technology or innovation I think that makes it more challenging to do with
Consolidation in those spes yeah another trend is I would say the classic asset managers entering the private Market space uh and that’s no surprise I think a striking figure private markets or Alternatives we present less than 15% of all assets under management but 50% of the asset management in free
Revenue y so that explains I think some of the appetite some some asset managers have for for private markets yeah and the other aspect of it too is just that so many companies are staying private now as opposed to going public so you know if you want to capture the entire
Investment opportunity set then you have to have exposure to private markets at this point um because of that because it can stay private longer and we’ve seen situations where you know a $400 million bout fund will sell to one of the properties to a billion and a half
Dollar bout fund it will then sell to A10 billion bio fund so you know we we’ve owned some assets under three different fund structures as they as they go through this and so this again is an evolution of the market where you’re seeing this this hierarchy develop across biot space especially uh
And also in the growth space at this point too that you know didn’t exist 20 years ago um you know typically was most of your exits were either to IPOs or to Acquisitions now that third group of selling to another private equ fund becomes real interesting thank you thanks guys so I
Tell you what we’ve got about 15 10 to 15 minutes left let’s move on to one of the main topics we seem to hear spoken about written about um a lot these days which is the retailzone structure and since the revamp elff more applications and launches have been seen
In the sector in Luxembourg for example or so so I here and certainly a number of firms in the UK have launched LS in the past year or so such as schro and vaver investors antoan and Billy is your sense that this is a vast opportunity for private markets firms that they will
Enthusiastically Embrace andto I’ll go to you first yeah I think it’s a huge opportunity for for private markets uh and it’s a huge opportunity for reala investors um as B said if you want to build some exposure to high growth activities or assets uh and to some expert investors Playbook private markets are
Definitely uh the place to be and I think as you said Nick the fact that Regulators in Europe would be interesting to get bil’s views on in the US but the fact that Regulators in Europe are pushing hard so that more retail Capital goes into private markets
Is quite significant I think it means uh there’s uh really uh a highway to you know opportunities for both retail investors and and and private markets but uh to be fair I think accessing retail capital is very demanding for GPS for for asset managers uh yes it’s the
Case there have been some successes um 25% of the assets managed by Blackstone right now are retail assets and KKR mentioned like 25 or 30% of the capital they’re planning to raise in next few years will be wealth management or retail Capital but no one not everybody
Is KKR and Blackstone it takes some infrastructure some skills some people some staff uh so I think it’s uh it will be very demanding plus you will see more uh more regulation more scrutiny uh and so GPS will have to be more transparent and more accountable
For what they for what they do and this this has a cost so this leads back to the consolidation we are mentioning I think sometimes you need to be pi to tap that kind of potential Billy I don’t know if there’s any particular angle they you bring from the
US at all but um democratizing a of private Equity yeah I think it’s an interesting topic and I applaud the European Regulators for seeing be out in front of this opposed to as opposed to us Regulators doing this um you a couple issues here I think that are are are
Challenging one is it’s going to be interesting to see how they structure the vehicles to manage the liquidity requirements uh because I think that’s going to be critical in terms of what kind of returns you can generate how much of a buffer you need to maintain in
Order to um still invest private Equity but service the needs of somebody that wants to do redemptions so I’m be kind of curious to see how this evolves I think another really interesting aspect of this that is could be particularly challenging is education I I think a lot
Of people don’t understand what private Equity is don’t understand all the Dynamics of it don’t understand how how the call how Capital calls work how valuations work how all that works and I I spend a lot of my time uh doing education sessions and these are often
Times for people on Boards of of clients that don’t know anything about it it’s not negative it’s not derogatory is just they haven’t been exposed to it before and there’s enough differences in private markets that it’s not obvious well we just put a paper out uh talking about public versus private
Methodologies and the basic idea behind that is a lot of people think you can take public methodologies and apply them directly private Equity with some with some adjustments and it does they just don’t work you can’t do a variance you can’t do correlation you can’t do an AET is you
Know optimization straight up you have to make the adjustments for all of that so it that’s educating people that are on boards you know educating retail people in that is going to be a lot different of an animal and you certainly want them to understand the risks and opportunities the asset class offers
Before they make that investment decision and I think that’s that’s going to be that’s going to be a bit chall going forward thanks um I just just before we move on I noticed somebody in the audience is asking about uh the current markeet and green impact for VC uh early
And growth funds I mean maybe not going that specialist I don’t know but let’s just maybe at least nod towards ESG in private markets we we’re not particularly planning to speak about it but not surprising it’s not surprising there some interest there in the audience I mean ESG and private
Markets still an still a big topic I imagine at least this side of the pond as it were one an one I would comment on from a European perspective and I’m sure Billy may have some some others from the other part of the ocean but um ESG is
For sure very core topic but something again I need to stress is the pressure on liquidity and returns is so high that was you know perhap some sometimes seen as a luxury you know this PSG sustainability uh approach are in a way in the background first you need to deliver
Liquidity uh and returns but good news there’s good reasons to to think that sustainability and ESG are key components of value creation at the Port level I’m convinced and most investors are that sustainable assets most valuable uh than than the rest of them so so I think uh that’s where we are
Right now sustainability still is key uh provided you deliver returns uh and liquidity Billy the US yeah in the US we’re seeing certainly it’s gain gaining a lot of attention so a lot of fund managers will make sure that the the companies they invest in are going by
ESG standards uh so that that has become much more common than it has been before in terms of sustainability um it’s I don’t see fund managers directly targeting those kind of assets um I I see if if it if they find one that’s to 10 pound’s point they think they can
Generate return on then that that’s a bonus but they’re not specifically seeking those out uh typically what we like when we see our fund managers is to see if not to focus on one area any one particular area but if if they can add value through it then certainly we we’d
Like seeing that happen in our portfolio it’s a very broad um investment theis that you can tackle from VC infrastructure buyer growth Etc so the point is really finding the right approach and and managers I guess I just I just put this one in here
As well if you don’t mind any any point in priv equity firms listing any thoughts on that is that uh is that is that possible is that does that does that make sense again another question from our audience here think it well really you have more
Us GPS listed than we have here in Europe so yeah I think when you I think not not all GP should list but the larger ones where they become basically asset managers make sense um what I’ve always concerned about when I see someone list and and guess why qualified
By the larger firms is the the the alignment of incentives um you know as mentioned earlier I one of things I like about private Equity is how closely the GPS incer align with the LPS and when you list I’m not I’m not sure that that is a stronger relationship as it was
Before that’s been discussed a lot but also I think this industry is moving from an asset Light Industry where you could run uh you know your your firm with two three people in an office to uh you know more Capital intensive uh businesses because of you know the new layers of cost of
Technology regulation Etc but also because of LPS asking for larger uh GP commitments and in a way you need some balance sheet to you know to commit to your own funds and to be better aligned with some of your of your of your LP so I that this explains why some GPS are
Now listing uh and look at what apologo did by buying an insurance company you need some balance sheet to do that okay thanks look I think we’re we’re kind of pushing towards the the end now so I just got a couple of uh brief brief questions to ask for a few
Fairly brief thoughts um on on on these I mean these topics are in themselves to the very large topics but first of all climate investing uh looking back at cop 28 last year were there any key takeaways for the industry antoan come to you first on that I think climate is another aspect
Of the sustainability thesis but it’s uh climate uh investing is taken very seriously by uh private markets uh participant both LPS and and GP is uh many of our IPM clients were at the cup uh in Dubai last last November uh and many announcements were released in Dubai the launch of you know
Very large uh envelopes and and funds to to take climate change so that’s a huge opportunity for uh for private markets where there’s a growth potential and and where Capital can provide with Positive Solutions so I see that as a great opportunity again the question is would
That be a VC opportunity uh would that be an infrastructure opportunity uh etc etc so these questions are are still open I think Billy cop 28 any takeaways there yeah I think that one of the challenges uh to end from point A little bit is with climate investing it’s the capital intensity that
Associated with it and that lends itself to some of the larger firms operating in that space other than something like a you know VC investing in a technology breakthrough kind of solution so I think it’s almost a barbell situation where you get startup Technologies you know
Either through a VC or growth fund and then you have large file opportunities I think the middle ground of that is less per than than those those two areas for for any kind of climate invest yeah but here again the the connection between private capital and government and
Regulation will be very very important that’s something that been commented on in Dubai and so next and artificial intelligence what do you make of the AI Revolution for the private Market industry antoan we go to you first as well well I think it’s an obvious opportunity uh and everyone knows it I
Think focusing on private equities or you know the buyout in particular I think it’s evolved over time into being really and genuinely gross investors seizing gross opportunities and delivering gross uh revenue and and profitability at the portfolio level AI is clearly a very important tool in the
Toolbox of you know to to unleash some growth and and productivity so I see that as a very very important um opportunity for for private Equity investors uh that many are already uh implementing and and and seizing uh and I think it can also have an impact that
Uh at a at a GP level uh some fund managers are leveraging on AI to Source uh deals uh to you know crunch data and and and connect their due diligence uh so it’s something to monitor it’s probably early stage on but would be interesting to to monitor in the
Future Billy I know you’ve got a particularly deep interest in in Tech so what do you think to AI in the private markets industry it’s gonna be interesting to see how it develops yeah I started Life as a system engineer with ulip hacker before getting into
Investments and finance um so I have a de I’ve been around technology for a long long time spent a lot of time out Silicon Valley um so have deep roots there you know artificial intelligence is one of those Technologies that’s been around the corner always around the
Corner for quite a long time you know before that it was machine learning dat data centers all that kind of stuff um it looks like it’s starting to turn that corner and be useful I think it’s going like a lot of other Technologies it’s going to take time to sort out to find
Out where it’s best used and how it’s best used um I think short of that I think everyone’s going to advertise to have ai whether improves the life not but I do it’s going to be interesting to see what areas it specifically does well at we we’ve
Already seen one example of this with you’ve seen the numbers on breast cancer diagnosis and AI has done a spectacular job of improving that that area where it picks up a lot of things that the human eye doesn’t pick up so I think there are areas that like like like that and that
Will be very useful to have ai as a tool set um but what all those how all those map out I’m not sure at this point but it’s going be interesting to see where where it works and where it doesn’t work okay well thank you very much uh to
Both of you I think I should bring things to a close now we’re kind of at our time limit I’m sorry if you’ve not been able to deal with all audience questions but um you know perhaps we can I could at least relay questions to our
Guests today and again I’d like to thank our speakers that is to say William Billy Charlton PhD who is global head of data analytics and research at the mer investment Consulting and Antoine Coulson chief executive of IPM thanks for joining us today to share your thoughts thanks Nick
Us great and also thank you to you the audience for being here we hope you’ve learned something new today or had your perspective expanded and perhaps we’ll see you at ipen can in just a few days time January 23rd to the 25th in the meantime thank you everybody goodbye