In: private equity The industry has grown by more than $ 7, due to the demand for a higher-yielding but costly opaque strategy, prompting people like Schroders and JPMorgan to launch new divisions and others to shop.
Although it was still strange for the traditional asset management industry, which mainly invests in fixed, state equity և bond markets, the explosive growth in sectors such as private equity brought the total private equity industry to $ 7 by the end of 2020. , 4 ttons, Morgan Stanley. The bank expects it to reach $ 13 tonnes by 2025.
Private capital is now grows just as fast as cheap, index-to-index passive investments, which pushes large asset management groups to expand their operations in the area to counter profit pressures on traditional investment routes.
Schroders, the UK’s largest listed investment group, earlier this week announced it would consolidate all its private equity vehicles into a new structure called Schroders Capital. At the investor event, he promised to double those assets to 86 billion pounds by the end of 2025, Barclays said.
“The platforms will be key to what I call the ‘industrialization’ of private markets,” said Georg Wunderlin, global head of Schroeders Capital. “We are 15 years behind public markets, but the industry is maturing in the same way.”
JPMorgan Asset Management also created a new section this week called JPMorgan Private Capital: to invest in the area, while other investment groups say they are looking to make a start.
“This is something we value,” said Robert Sharps, chairman of T Rowe Price and chief investment officer, at the company’s annual shareholders’ meeting last month. “For many of our clients, the trend towards a more viable strategy and the placement of private assets is not something we have lost.”
Industry officials say the biggest role in the appetite for private equity is the low interest rate environment and high stock market ratings that have overshadowed prospects for future returns from those asset classes. At the same time, private markets are less volatile because they are rarely sold,: estimates may be more subjective, opaque, which actually increases their luster for many investors.
For many investment groups, under the pressure of the explosive popularity of cheap, passive funds, the appetite is huge, Morgan Stanley analysts said in a report on Thursday.
“Payments for traditional asset managers will be relatively more difficult to defend, given the commodification of the industry and the challenges it faces,” the report said. “As a result, we expect traditional asset managers to use these levers more to protect existing revenue pools, while at the same time leaning on alternatives with better pay and private markets with higher structural growth.”
Private capital It still accounts for the largest share of the private equity space, with assets of more than $ 3 a year, but it is growing more slowly than areas such as private lending, funds bypassing banks, ordering lending. directly to companies և infrastructure.
However, the fastest growing angle, the so-called “growth of equityWhich usually means investing in companies that are too big to run classic venture capital firms but do not want to go public or sell all their private equity.
At the end of last year, capital growth accounted for 14 percent of the private equity industry, up from 5 percent in 2005, according to Morgan Stanley. JPMorgan Asset Management announced earlier this week that it had recruited Christopher Davey from Goldman Sachs to lead the new growth in equity as part of a wider private equity drive.
“Growth equity, private debt, is one of the fastest growing asset classes in the alternative industry, and both individual and institutional investors are in high demand to exit the markets,” said Brian Carlin, CEO of the newly formed JPMorgan Private Capital. in the announcement.
In: private equity The industry has accumulated almost $ 2.5 tons of “dry powder” – money made by investors, but still allocated. This underscored the fierce competition for attractive deals, prompting some analysts to warn that revenue could not be as vibrant as it once was.