Agefi Luxembourg - novembre 2024

AGEFI Luxembourg 22 Novembre 2024 Fonds d’investissement By Laurent CAPOLAGHI, Partner, Private EquityLeader&AncaLUNGUNEGOITA, Audit Partner, Private Equity&Commercial Products, EYLuxembourg T he landscape of private capital fundraising is per- petually evolving. As we turn the page on a year filled with challenges, a renewed sense of stability and optimism is emerging within the industry. The past 18 months have compel- led investors to re- think their strategies and adapt to an unpre- cedented new normal. Current fundraising outlook: Amixedpicture of growth and caution The fundraising landscape in Europe in the first half of 2024presents amixedpicture. The total amount of fundsraisedhasbeenincreasingsinceH12022,reach- ingUS$107.3binthefirsthalfof2024—a53%increase comparedtoH12023 (1) .However,despitethisincrease in closed volumes, Limited Partners (LPs) have been selectiveintheirfundstrategies.Thenumberoffunds closed in Europe has decreased by approximately 15%,from92fundsinH12023to78fundsinH12024. Additionally, the capital raised is concentrated in a smaller number of large funds. This dichotomy of rising volumes and decreasing fundcountssuggeststhatLPsarefavoringlargerand more established funds over smaller or newer ones. This selectivity reflects the challenging macroeco- nomic context and heightened scrutiny on perform- ance andvalue creation in the private equity sector. The consolidation of capital within fewer funds has also amplified competition among General Partners (GPs),whonowface increasedpressure todifferenti- ate themselves through unique value propositions, proven investment track records, and specialized strategies. Howcanmanagersnotonlynavigate,but also capitalize on this evolving landscape? Intensifying consolidation among private equity firms Amidst this changing environment, consolidation within the private equity sector is accelerating.Major firmsareactivelyacquiringnicheandmid-sizedman- agers, to expand their platforms and diversify their productportfolios.Thisstrategicconsolidationenables these largefirms toenhance their expertiseandaccel- erate their offerings to both current and prospective investors.AccordingtorecentsurveysofLPs,64%ex- pect at least one of their invested PE managers to merge or be acquiredwithin the next two years. Addressing current fundraising challenges throughproduct innovation Tonavigate the evolving fundraising landscape, GPs areexploringinnovativesolutionsandadaptingtheir product offerings to remain competitive and meet LPs’ expectations. Several strategies are emerging as GPs respond to the newmarket conditions: GP led secondaries and continuation funds : In today’s market, one significant challenge for GPs is the extended timeline required to exit investments. Beforethepandemic,theaveragetimetocloseafund was about 15 months, but this has now lengthened to an average of 19 months due to increasedmarket volatilityandgeopoliticaluncertainty.Thisextended timeframe has led to the emergence of continuation funds as a crucial tool for GPs. By establishing these funds, GPs can continue man- aging high-performing assets beyond their initial fund lifecycles, offering LPs the flexibility to maintaintheirinvestmentsandavoidprema- ture liquidation. This trend reflects a prag- maticresponsetotheprolongedexittimelines and the growingneed for liquidity solutions. Co-Investment opportunities : Co-invest- ments, already very popular, have gained considerable traction as LPs increasingly pri- oritizedirectinvolvementindeal-making.Of- feringco-investmentopportunitiesallowsGPs toattractLPs,whoarekeentoexercisegreater controlovertheircapitaldeployment.Thisap- proach not only enhances LPs’ exposure to specific investments but also helps mitigate fees, as co-investments often come withlowermanagementcharges.In thisenvironment,providingco-in- vestmentavenueshasbecomean essential differentiator for GPs aiming to secure new com- mitments. Preferredfeestructures :Ad- ditionally, as scrutiny over fees intensifies, GPs are in- creasingly offering pre- ferred fee structures to retainLPloyaltyandfos- ter newrelationships.At- tractive discounts and tailoredincentivepackages are being implemented to reassureinvestorsaboutcost efficiency and demonstrate GPs’commitmenttodelivering value.Thisfocusonadjustingfeemod- els aligns with LPs’ growing emphasis on trans- parency and cost-effectiveness. Larger firms expanding asset classes : To maintain their competitive edge, larger private equity firms are broadening their scope by diversifying into new asset classes. Beyond traditional buyout strategies, these firms are increasingly exploring sectors such as private credit and infrastructure. This expansion caters to LPs seeking resilient, scalable investment options. As private credit is projected to grow at a compound annual growth rate of 9% through 2028, larger firms that successfully diversify are poised to capitalize on this trend and attract institutional cap- ital keen onmulti-asset solutions. Navigating fundraising challenges with investor- centric innovations : With an untapped potential of $80 trillion fromhigh-net-worth individuals, the Pri- vate Equity (PE) sector stands before a significant growth opportunity. Traditional barriers, such as high investment minimums and long-term capital commitments,havehistoricallylimitedretailinvestor participation in privatemarkets. Currently, retail in- vestors allocate a minimal portion of their portfolios toprivatemarkets,withlessthan2%investedinthese assets. If these allocationswere to expand to the pro- jected 5-10%, it could result in an influx of approxi- mately $10 trillion to alternative assetmanagers. Regulatory changes opening private equity tomore investors However, in response to rising interest from retail investors, policymakers and regulators aremaking strides to open private equity to a broader investor base. In Europe, the European Long-Term Invest- ment Fund (ELTIF), introduced in 2015, was a reg- ulatory milestone designed to bring institutional and retail investors into the realm of long-term as- sets, such as infrastructure and debt. Additionally, anotable innovation in theprivate eq- uity space is the rise of semi-liquid funds. These funds aim to bridge the gap between traditional closed-end funds and more liquid investment ve- hicles by offering periodic liquiditywindows. This flexibility allows investors to enter andexit the fund at regular intervals,making these funds particularly appealing to non-institutional investors who are wary of committing to long lock-up periods. By of- fering this liquidity option, GPs can attract a broader range of investors looking for a middle ground between traditional private equity and liq- uid alternatives. How technology is making private equitymore accessible Alongside regulatory shifts, recent years have seen the emergence of technology-driven players that are addressing major barriers to private equity in- vesting. Through digital platforms, these technolo- gies are broadening access to private markets, significantly increasing the investor base and en- hancing transparency within the asset class. One category of fintech platforms is tailored to high-net-worth individuals who qualify as profes- sional investors, allowing themto invest independ- ently through master-feeder structures on digital platforms. This approach reduces the “transaction and search costs” involved in identifying suitable investments, while also boosting transparency across the industry. Another groupoffers “plug-and-play” tech- nological solutions for traditional wealth management institutions seeking to expand private equity offerings to their clients. These platforms handle end-to-end opera- tions, enabling institutions tomeet client de- mand without major changes to their existing models and reducing time to mar- ket for this segment. 1) EY - State of Private Equity (PE) Report Europe Q2 Private Equity fundraising in 2024: Adapting to a Shifting Landscape Overthenextsixyears,theretailmarketwillmorethandoubleasapercentageofPE’sAUM Par Allan FOLL, Head of Thematic Global Equity – Society, Candriam L es changements démographiques transforment l’économie mondiale, créant des opportunités d’investisse- ment. La population mondiale croit, vieil- lit et s’enrichit. De telles dynamiques influencent la demande en soins de santé, technologies, biens de consommation et infrastructures et redéfinissent ainsi les secteurs clés. Une population mondiale croissante Selon les Nations Unies, la population mondiale devrait atteindre 9,7 milliards en 2050, contre 7,8 milliards en 2020, soit une augmentation de 24%. Une telle croissance engendre des besoins grandis- sants en ressources naturelles et infrastructures, tout en appelant à des solutions durables. Les conséquences sont multiples : - Une demande accrue en ressources vitales : la production alimentairemondiale devrait croître de 60% (1) et la demande en eau augmenter de plus de 40% (2) d’ici 2050. Cela crée des opportunités d’in- vestissement à long terme dans les technologies agricoles, les infrastructures et les solutions de ges- tion durable de l’eau. - Une urbanisation galopante : d’ici 2050, 68% de la population vivra en ville, contre 55% au- jourd’hui (3) . Cela signifie davantage d’infrastruc- tures urbainesmodernes : transports publics, villes intelligentes, gestion intelligente des déchets. Une population vieillissante La populationmondiale âgée de plus de 60 ans de- vrait doubler d’ici 2050, sous l’effet de l’augmenta- tion de l’espérance de vie et de la baisse des taux de natalité (4) . L’espérance de vie moyenne est pas- sée d’environ 50 ans en 1950 à plus de 73 ans en 2020, ce qui accroît la pression sur les systèmes de santé. Parallèlement, la baisse des taux de fécondité dans les pays développés accélère le vieillissement de la population et réduit la main-d’œuvre dispo- nible, notamment en Europe et enAsie. Plusieurs opportunités d’investissement peuvent découler de cette situation dans des secteurs tels que la gestiondesmaladies chroniques, les produits pharmaceutiques, les soins aux personnes âgées, la télémédecine, et les technologies médicales. En outre, la réduction de la main-d’œuvre dispo- nible va accentuer la demande d’automatisation, faisant de la robotique et de l’IAdes secteurs à fort potentiel de croissance.Avec l’allongement de l’es- pérance de vie, les services de planification et de financement des retraites deviendront également de plus en plus cruciaux. Une population plus riche Le développement rapide des pays émergents a propulsé l’essor de la classe moyenne, particuliè- rement en Asie, où elle passera de 2 milliards de personnes en 2020 à 3,5milliards en 2030. En com- paraison, la classe moyenne enAmérique ne croî- tra que légèrement. Conséquence, d’ici la fin de la décennie, les deux tiers de la classemoyennemon- diale devraient se situer enAsie (5) . La croissance économique, soutenue par la mon- dialisation, une meilleure éducation et l’industria- lisation a conduit les pays émergents à aligner leurs habitudes de consommation sur celles des pays dé- veloppés. Avec l’augmentation de leurs revenus, les ménages de ces pays dépensent davantage dans l’éducation, les loisirs et les technologies nu- mériques, tout en exprimant une demande crois- sante pour des marques internationales dans des secteurs tels que le luxe, les cosmétiques et les vê- tements de sport. L’intégration technologique transforme également les économies et lesmodes de consommation. L’es- sor des formules d’abonnement, couplé aux avan- cées en intelligence artificielle, dans le cloud et le big data, remodèle les modèles économiques et permet aux entreprises de proposer des services plus personnalisés et plus efficaces. Cela génère de nouvelles opportunités d’innovation et de crois- sance dans de nombreux secteurs. Investir dans les tendances démographiques peut constituer une opportunité stratégique pour ceux qui cherchent à profiter de la croissance future at- tendue dans de nombreux secteurs. En s’alignant sur ces dynamiques, les investisseurs peuvent ca- pitaliser sur des changements structurels à long terme dans un environnement international diver- sifié, tant sur le plan géographique que sectoriel, incluant à la fois des opportunités dans des valeurs cycliques et non cycliques. Telle est l’ambition de la gestion que nous mettons enplace au seinde notre stratégie d’investissement Démographie. 1)Worldagriculturetowards2030/2050:the2012revision|AgrifoodEco- nomics|FoodandAgricultureOrganizationoftheUnitedNations (fao.org) 2)WorldResourcesInstitute,AqueductDatabase(2020) 3)68%oftheworldpopulationprojectedtoliveinurbanareasby2050,says UN|UnitedNations 4)Ageingandhealth(who.int) 5)TheriseofAsia’smiddleclass|WorldEconomicForum (weforum.org ) Les changements démographiques, une source d’investissement pour l’avenir © Freepik