The private equity world, just like the rest of the global financial services industry, has entered a period of heightened uncertainty. The shock result of the UK vote to leave the European Union has resulted in short-term volatility in currency and equity markets and medium-term uncertainty over the regulatory landscape and macro outlook in Europe.
The position of limited partners around the world is generally one of “wait-and-see”. Private equity is a long-term asset class and our conversations with investors this week reveal that, while they may have already positioned their portfolios for volatile times, they will not be taking any dramatic action in the short term. “It is too early to make judgments,” the Universities Superannuation Fund said in a statement on Thursday.
Accordingly, buyers of fund interests in the private equity secondaries market – a group who would clearly benefit from any dramatic portfolio management by LPs – are not yet rubbing their hands with glee. As our sister site Secondaries Investor has reported, transactions have been put on ice in the short term and there is no consensus on if, when and how the market will thaw.
We’d love to know your thoughts on how this event will affect your business; please do take our short survey.
Impending Brexit is just one of many challenges facing private equity firms and limited partners. In a low-interest rate, low-growth environment there is fierce competition for assets, and hence high prices to pay.
So GPs are having to work much harder to create value for their investors; buying low and selling high – the most effective way of generating returns – looks unlikely. LPs want to back managers that can outperform in both good times and bad.
To help shine a light on the industry’s top operators, Private Equity International is bringing you the Operational Excellence Awards for its fifth year.
Submissions are now open and will close on 12 August 2016. (You can read about last year’s winners here)
WHY YOU SHOULD ENTER
• Gain recognition from LPs as a best-in-class operator;
• Demonstrate your credentials as a potential partner to future management teams;
• Highlight and reward the work done by your internal operating teams.
HOW IT WORKS
If you are a GP that has exited a deal in the last 12 months* and has a compelling value creation story to tell, we want to hear from you.
HERE’S THE PROCESS
1. Fill in the submission form, providing as much specific information as possible about key metrics that demonstrate how you operationally improved a business (feel free to supplement the form with additional information you think would be useful).
2. Submit your entry before 12 August (you can contact OpEx@peimedia.com if you have any additional questions).
3. A panel of judges in EMEA, Americas and Asia will convene to decide which firm they think are the most impressive entrants in the four separate size categories: large-cap, upper mid-market, lower mid-market and small-cap**.
4. PEI will announce the winners of the 12 categories in the October issue of Private Equity International, along with a full explanation of exactly how they added value over the lifecycle of the deal.
*The investment must have been at least partially realised on or after 1 June 2015.
** For the purposes of these awards, ‘large-cap’ refers to any deal with an entry valuation over $500 million; ‘upper mid-market’ refers to any deal with an entry valuation between $150 million and $500 million; ‘lower mid-market’ refers to any deal with an entry valuation between $50 million and $150 million; and ‘small-cap’ refers to any deal with an entry valuation between $5 million and $50 million.
NB. Firms can enter more than once if they have completed more than one exit during the qualifying period.