Private equity trends: exploring the latest disruptive innovations in the industry

Amid the current climate, a few things have become increasingly challenging, resulting in a slowdown in fundraising efforts and clients extending their fundraising periods. However, the industry has observed a positive trend towards Hybrid funds, which allocate to multiple asset classes, including private and liquid assets says David Fowler, Co-Head of Private Equity at Apex Group.

A fresh take investment structures

In response to investor demands for greater liquidity at both the asset and investor level, fund managers are launching more evergreen and quasi-open-ended structures. These structures have also provided new fundraising avenues, as managers seek to attract retail investors in addition to the traditional institutional investor base.

As the industry continues to evolve, managers are adapting to these changes by exploring new ways to provide investors with greater flexibility and liquidity options.

“The trend toward Hybrid funds and evergreen structures reflects this shift, as investors increasingly seek to diversify their portfolios and manage risk effectively.”

In the current market conditions, certain investment strategies have proven to be particularly successful. Specialist fund managers and larger fund managers with a strong track record have been able to attract a greater number of limited partners (“LPs”) to their offerings.

We’ve moved on from the pandemic…

As a result of the pandemic, we have observed a surge in healthcare-focused funds, as investors look to capitalize on the increasing demand for healthcare services and products. Renewable energy funds have also performed well, bolstered by global governmental policies and regulations in this space.

Another preferred investment strategy in the current market is special situations funds, as investors seek to take advantage of opportunities arising from interest rate hikes and distressed assets.

Overall, the market has preferred investment strategies that are able to capitalize on shifting trends and changing conditions, whether through specialized expertise or broader market insights. The ability to adapt and capitalize on emerging opportunities will continue to be a key factor in investment success moving forward.

What outsourced product innovations are managers using more of

As businesses seek to create efficiencies and streamline processes, they are increasingly looking to outsource carry plan administration. Traditionally carried out by in-house teams, this function can be resource-intensive and highly sensitive, leading clients to value the independent oversight provided by an external partner.

We are able to provide leading-edge fintech solutions to support carry plan administration, along with a qualified team of experts to carry out the service. Our global clients can rest assured that their carry plans are being administered accurately and effectively, while they focus on other key aspects of their business.

We are also seeing an increased demand from clients for our specialist teams to partner with their own teams and support them across different functions. Our people are working alongside clients as an extension of their team, bringing specialized knowledge and access to a vast talent pool.

ESG gains momentum as reporting deadlines approach

In response to growing interest in ESG, we have seen a surge in demand for our ESG services. ESG reporting continues to be a hot topic in 2023, and we are committed to providing our clients with the support they need to effectively navigate this complex and rapidly-evolving landscape.

Overall, our business through our single source solution is dedicated to helping our clients achieve their goals through tailored, flexible solutions that meet their unique needs. Whether through carry plan administration, teaming, or ESG services, we are committed to delivering the highest level of expertise and service to support our clients' success.

Expectations and predictions for the rest of 2023

There’s going to be a sharp rise in the number of continuation funds being launched, as both general partners (“GPs”) and LPs seek to hold onto assets with the expectation of valuation increases beyond the typical fund life.

As digitization and tokenization continue to transform the investment landscape, we also expect to see an increased demand for seamless digital processes and access to data. GPs are increasingly recognizing the value of the data they hold and are seeking to leverage this information to create additional value for their investors.

How can we help

We remain committed to providing the industry with cutting-edge solutions that meet the ever-evolving needs of the market. Our expertise in the areas of continuation funds, digital processes, and data management positions us well to support our clients as they navigate the challenges and opportunities of the investment landscape. We look forward to continuing to partner with our clients and to delivering the highest level of service and innovation in the industry.