Tag Archives: Industry Insights

Evergreen Funds: Redefining Private Equity for Private Wealth

The private wealth revolution is surging ahead. Private market evergreen funds, or ‘semi-liquid’ funds, are the talk of the town, as wealth platforms increasing turn to private market groups to distribute their fund strategies to a wider cohort of mass affluent investors. The drawbridge to access private equity is finally lowering. It is no longer the preserve of Wall Street…now Main Street gets to enjoy the myriad advantages to investing in private assets. Assets under management are in excess of $320 billion across US- and EU- domiciled funds.

For a growing number of GPs, private wealth is a key tenet of their long-term business strategy with blue chip names such as KKR expecting evergreens to represent 50% of its fund offerings over the coming years. And while the universe of fund managers offering direct investment evergreens (investing directly in companies compared to investing indirectly through multi-GP fund products), remains modest, private banks expect it to rapidly expand.

Private Equity and Sustainability: A Market Shift Too Big to Ignore

For years, ESG was viewed as a mere checkbox—an obligation rather than an opportunity. However, that perception is shifting rapidly. Private equity firms across Europe are increasingly recognizing that sustainability is no longer a niche investment theme, but a key driver of value creation, competitive advantage, and long-term resilience.

As governments enforce aggressive decarbonization targets and industries face mounting pressure to transition, private capital is being called upon to bridge the funding gap and support portfolio companies in adopting more sustainable models. The role of private markets in financing energy infrastructure, industrial transformation, and climate-tech innovation is growing, and firms that fail to integrate sustainability into their investment strategies risk being left behind. The influence of private equity funds on the strategies of their portfolio companies and on the economy is well understood, and their stewardship strategies are becoming central to theis value creation efforts.

Impact Investing Insights: LP-GP Dynamics and Emerging Trends

Impact investing continues to evolve as GPs work hard to develop effective ways to measure impact potential in their portfolios and improve the quality of reporting. This is something that LPs are increasingly focused on as they screen deals to determine the strength of the impact thesis. Returns are still a priority but investors are becoming more forensic in understanding the tangible improvements to society.

Over the last two years, IPEM has made significant strides highlighting many of the key topics and challenges facing impact funds. During the Impact Summit on Day 2 of IPEM Paris 2024, supported by Astanor, Capricorn Investment Group, Indefi and Simpl, delegates heard about what LPs are looking for in impact funds, opportunities in emerging markets, whether or not impact funds were now mainstream, and investing in education and social inclusion.

Some of the key investment themes that LPs are considering range from industrial decarbonization to food supply chain innovation – i.e. alternative protein, regenerative farming – and plastic waste.

Specialization continues to influence Europe’s VC & Growth Market

Europe’s venture capital industry is still trying to find its feet, as it recovers from a sluggish 2023. The second quarter of the year was encouraging, with $15.6 billion raised. However, Q3 was a tougher fundraising period, during which late-stage funding fell by more than 50% y-o-y. As noted by Crunchbase, early-stage funding to European start-ups declined 12% y-o-y. This hasn’t quelled appetite among VC managers, with a number of new fund launches in recent weeks including London-based Atomico, who raised $1.24 billion across two funds. On the growth side, Resurge Growth Partners recently launched a EUR120 million venture equity fund to back European and Israeli start-ups.

Total VC capital for 2024 is forecast to hit $18.8 billion and as was referenced in IPEM’s Weekly Spin, the European Union is taking measures to address the innovation gap between Europe and the US and China. The new initiative, dubbed the Trusted Investors Network, will see the EU partner with European venture capitalists to support technology investment, and help catalyze growth in deep tech companies. In total, some 71 investors with combined assets of EUR90 billion have signed up to the new initiative.

Sourcing the highest quality deals has become highly competitive, including Series A and Series B deals, as European VC firms look to deploy capital. And as was noted during the Venture & Growth Summit at IPEM Paris 2024, there are signs that Europe’s VC market is becoming more sophisticated, where deals are more downside protected. Investors are spending a lot more time on valuations, resulting in a longer time for deals to get to market. Later stage instruments like IPO warrants are being used, to realign valuations at the time of exit, as deal structures evolve.

3D View: The 3 Megatrends Shaping Infrastructure

These trends – which, in turn, open up thematic discussions around energy transition, and data/digital infrastructure developments (i.e. fiber optics, 5G towers, data centers) – have been an important feature at IPEM’s last two events: IPEM Paris (September 2023), and IPEM Cannes (January 2024). IPEM’s Infrastructure Summits bring industry experts together – both GPs and LPs – to present industry data and discuss the latest asset class developments. As such, they give delegates a great opportunity to delve deep into the details and ensure the right questions get addressed. Over the last two years, an array of leading organizations have taken the stage, including:

● Arclight Capital Partners
● Aon
● AXA IM Prime
● Eiffel Investment Group
● Vauban Infrastructure Partners

One of the key takeaways from the last two summits is that the ‘3D’ megatrends will open up the need for continued private investment over the coming decades. Funding gaps in the middle market, in particular, are likely to provide plenty of deals for investors to pursue, and drive operational improvement.

With inflation rising alongside interest rates, infrastructure has continued to expand in recent years. European core infrastructure investment has grown from approximately EUR26 billion in 2009 to EUR150 billion today. There is an optimistic feeling among institutional allocators on how infrastructure allocations will progress over the next few years given how resilient the asset class has proven to be across economic cycles. Not to mention its strong de-correlation to equities, and its ability to offer an effective long-term hedge against inflation.

This has supported strong fundraising (though 2023 was an exception), with overall dry powder growing from $275 billion in 2020 to $339 billion through January 2024.