And so it ended. In the space of 24 hours, Silicon Valley Bank, the go-to bank for many US tech start-ups and VC funds, succumbed to a classic bank run as depositors scrambled to get their money out. And so it ended. In the space of 24 hours, Silicon Valley Bank, the go-to bank for many US tech start-ups and VC funds, succumbed to a classic bank run as depositors scrambled to get their money out.
Private equity can boost absolute returns when added to traditional diversified portfolios and remain a star performer among alternative asset classes.With inflation showing signs of persistence, investors will be hoping that PE funds can continue to turbo charge their overall risk-adjusted returns in the coming years. KKR’s latest white paper – Regime Change: The Role of Private Equity in the ‘Traditional’ Portfolio – outlines why the firm remains bullish in the current macro environment, in particular highlighting the importance of PE’s illiquidity premium. The report’s authors main punch line is that nimble value creation opportunities, efficacy in timing investments and exits, and company selection have been important drivers of performance. Investors will hope to remain entertained and applauding future returns as they continue to tap in to the power of PE.
Sport as an asset class is becoming somewhat of a slam dunk with sports-focused investment firms attracting $10 billion of capital.NBA All-Star legend Carmelo Anthony is the latest high profile name, building on an already active investment career to launch Isos7 Sports Investments, a PE fund that he is co-founding with George Barrios and Michelle Wilson. More PE/VC are developing a full court press to invest in sports franchises and associated businesses. Isos7 will use Carmelo’s industry nous to seek out minority positions in teams and leagues and build on his vision of being a ‘digital athlete’. With an estimated total addressable market (TAM) of $400 billion, expect to see more high-profile athletes entering the PE world in a bid for further glory.
Impact investment funds are growing in prominence, with GPs keen not to miss out and feel green with envy as investors seek to make financial returns while also having a positive impact on the world.Though far from a new trend, in private equity inflows are rising in to this asset class that is estimated to be worth $1.2 trillion. With TPG raising $7.3 billion for its sixth impact fund, other prominent names are stepping in to focus on green investments, including KKR who just raised $2 billion for their second such fund. As the trend develops, there are calls among regulators to tighten up how GPs quantify the ‘impact’ of these funds and avoid greenwashing. It is not inconceivable that the industry ends up with 50 shades of green, if more impact funds come to market. How GPs define their ambitions, and measure them, will be watched closely by investors and regulators alike.
TA Associates Management will be waiting for their laurel crown and gold medal following confirmation they generated the best returns for investors in 2022. This is according to the annual HEC¬-DowJones Private Equity Performance Rankings which features more than 560 large PE firms. That the tech-focused PE/VC firm are top of the charts is an impressive achievement at a time when some investors may have concerns over tech deals and valuations. But given that four of the top five performing firms this year have as much exposure to technology, media and telecommunications as any other sector, seems to suggest that there is still plenty of value to unlock. TA Associates are the leaders of the pack, and should be congratulated. But there will be plenty of other GPs looking to steal their glory and earn their own position on the winners’ podium next year.