The fundraising landscape is a challenging one at the moment – but the industry should be ‘cautious about being overly cautious’, according to members of JTC’s multi-jurisdictional team.
Dewi Habraken (Netherlands), Martin Punt (UK), and Vincent van den Brink (Luxembourg) attended the recent IPEM 2023 conference in Cannes, an important kick-off to the year in private markets.
Attracting some 2700 delegates spanning GPs, LPs and intermediaries, the theme for this year’s recent event was ‘Reality Check’ – which was apt in an environment that is complex, fast moving and requires an ability to adapt quickly.
“There’s no doubt that fundraising in the current market has been brutal, and there was a definite sense of concern amongst delegates at this year’s event,” said Dewi Habraken, Senior Director, in JTC’s Amsterdam office.
“However, that’s not the whole story. While it’s prudent to be cautious about what is undoubtedly a challenging, inflationary, high interest rate environment, there is definitely a positive buzz under the surface. We certainly see the private markets space as being in a state of change as investors and managers both reevaluate, ask fundamental questions of themselves and look to balance their strategies. And that’s not necessarily a bad thing.”
The JTC team were quick to point out how the sentiment at a large conference like IPEM 2023 can often become accepted as the reality, even if it is not – which is ironic given the theme of the event. Martin Punt, London-based Director, explained:
“It’s easy to get swept along and accept that everything said at large-scale events like this is fact, and to a certain extent that’s useful as a benchmark at a certain place at a certain point in time – but it’s important to challenge that too, and ask whether it’s a kind of false alarm. As with most things, it’s not all doom and gloom and it’s not all rosy either – the real picture is somewhere in the middle. What we’re rather seeing is a rebalancing of strategies.
“Yes, debt is not as cheap as it was and that will impact fundraising. But the chances are we will start to see inflation settle and interest rates plateau and start to come down in the not too distant future. We have got too used to a low interest rate environment whereas actually what we are seeing now is a landscape that is probably more ‘normal’ in the whole scheme of things.”
That’s not to say the coming months will be straightforward. “Being agile, ready to adapt and re-evaluating the market will take some hard work, but the opportunities will come,” says Vincent van den Brink, Commercial Director, in Luxembourg.
“We are still positive in terms of pipeline of private equity activity across our offices. The returns are there, it’s just that they are now likely to come from different sources and investors will be asking key questions around their positioning – ESG, infrastructure and the credit and debt markets will all feature prominently on those evaluations.
“Key for investors and managers is to seek out the right sort of advice and support so they can be ready to seize those opportunities and position themselves strongly for this new environment.”
To find out more about JTC’s private market solutions, please contact Dewi, Martin or Vincent directly.
