Q4 2021 Funds commentary

News: Insight & Opinion | 8 November 2021

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At the beginning of 2021, I highlighted several fund strategies that I felt were capable of performing strongly, due to the stage of their respective market cycles, and which we thought would be attractive, diversified, additions to the portfolios of our private clients.

These strategies included short dated opportunistic credit, structured credit, secondaries and private equity funds focused on turnaround investing and venture/growth. I’m delighted to say that over the past eight (busy) months we’ve been able to offer a substantial number of diversified opportunities across all, raising over £30m from our clients (and over-subscribed on several of our allocations) across seven different managers.

Due to the extensive relationships and networks our team have nurtured in the alternative funds and investment industry, our clients have gained proprietary access to opportunities that other private investors would be extremely hard pushed to match. For example, the deep-discounted portfolio of tech and life sciences stocks acquired by Hambro Perks from motivated seller, Invesco. Or DN Capital’s Global Venture Capital Fund V, from the stellar performing DN Capital camp.

Opportunistic strategies such as these were complemented over the period by credit strategies from managers with an interesting angle on the asset class. For example, SCIO, which focuses on the underserved sub £25m European corporate loan market, or Permira Credit’s Sigma 6, which focuses on CLOs, an asset class that has been resilient since the pandemic struck. Of course, these themes remain relevant and, if you missed out first time round, don’t worry we’ll be re-opening many of the opportunities over the next few months. But what else are we looking to add?

Looking forward to Q4 and into 2022, the pipeline of attractive fund opportunities continues to be strong and I am focused on looking for the differentiators and out-performers in their field. The demand for bespoke, hybrid capital solutions in Europe continues to grow and we will be looking to bring a strategy for a widely experienced manager that partners with entrepreneurial businesses to provide flexible growth capital.

Playing to current themes, the continued expansion in deep tech continues to accelerate and our partnership with the specialist in the sector, IQ Capital, will mean we can offer clients access to its fourth venture fund over the coming months. I also expect to explore a participation in the growing fund secondaries asset class as well as a more opportunistic turnaround fund of fund specialist. Both strategies will be shared with you before the end of Q1 2022.

Co-investments on the rise
Our relationships and reputation as a funding partner also mean we’re seeing an increasing number of co-investment opportunities. These often arise where a fund is selling down part of an investment already completed, in order to avoid concentration risk. In addition to the fund strategies listed above, we therefore, expect to be able to offer some exclusive co-investment opportunities in direct private equity transactions, which are expected to be for companies at a higher enterprise value than our own SME team focus on.