Private equity demand grows ‘significantly’

24 September 2019
| By Laura Dew |
image
image image
expand image

A report by Willis Towers Watson has found demand for private equity is growing significantly as companies change the ways they raise capital, offering opportunities for institutional investors.

The private equity industry had grown more than 500% since 2000 and was now valued at over US$3 trillion in 2019, it said.

It said companies preferred private equity as it reduced the need for quarterly reporting which was required for public companies. There was also more regulatory burden and rising ongoing costs for listed companies.

The fact companies were choosing to list on the market at a later date meant investors often missed out on the crucial stages of early growth in a company.

“Public market investors are accessing companies at a later stage of their development than in the past, if they are able to access them at all. When these companies list, they emerge as mature and large companies. This delay could lead to public market investors to miss out on a significant period of growth.”

For institutional investors who wished to access private equity, Willis Towers Watson suggested four routes to this:

  • Relying on companies in an existing public equity portfolio to acquire young and growing private companies via acquisition;
  • Invest in private equity or venture capital funds;
  • A private equity fund invites a fund investor to co-invest in a specific company; and
  • Asset owners bypass specialised private equity funds completely and invest directly in private companies.

Liang Yin, senior investment consultant at the Thinking Ahead Group, an independent research team within Willis Towers Watson, said: “Technology may well drive evolution in this space. It’s possible that crowdfunding platforms that already exist to connect businesses and investors in private markets could evolve to become the new private stock exchanges or even utilise the benefits of fractional ownership offered by blockchain technology to open up investment in private markets to a new segment of the investor community”.

“Whichever path firms choose to follow in the future, the private equity market looks likely to form a bigger part of the institutional landscape going forward.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

1 year 9 months ago
Kevin Gorman

Super director remuneration ...

1 year 10 months ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

1 year 10 months ago

An Australian superannuation delegation will visit the UK this month to explore investment opportunities and support local economic growth, job creation, and long-term in...

7 hours ago

An ASIC review has identified superannuation trustees are demonstrating a “lack of urgency” around improving their retirement communication and still taking a one-size-fi...

7 hours 35 minutes ago

Superannuation funds have welcomed the boost that Treasury’s improvement on the Low-Income Superannuation Tax Offset will have for women and younger members. ...

8 hours 14 minutes ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND