The Valt Journal #13
The Valt Journal #13
Featuring latest research on private equity (Hamilton Lane, UBS, Morgan Stanley); private credit (Arcmont, LGIM, Barings); macro & multi-asset views (Apollo, M&G, Goldman Sachs, Schroders, WEF)
Hi, welcome to the new edition of The Valt Journal. In every issue, we cover the best and the latest insights into the global private markets. The Valt Journal is a repository of time sensitive and timeless research, delivered to your inbox every 2 weeks, so you don’t have to look anywhere else! Clicking the headlines is all it takes.
PRIVATE EQUITY
✏️ A compelling time for middle-market buyouts
Hamilton Lane
Middle-market buyouts excel in uncertain markets, consistently outperforming public strategies and offering long-term portfolio stability, especially during volatile times.
📝 Constructing buyout-ready portfolios for the endgame
LGIM
LGIM utilizing their modeling frameworks, shares strategies for DB schemes to invest effectively before potential buyouts.
✏️ Three notable trends in the world of secondaries
Neuberger Berman
The private equity secondary market has expanded rapidly with annual transactions increasing from $20 billion to over $100 billion by 2022. What are the key trends to watch?
✏️ The new math of private equity value creation
Goldman Sachs
Private equity is pivoting from financial tactics to operational strategies, with focus on value creation levers like revenue growth and margin expansion.
✏️ The co-investor cavalry arriving to help private equity firms in need of cash
Institutional Investor
Private equity investors increasingly use midlife co-investments for liquidity, with deals rising by 60% in 2021-2022 and over 80% in early 2023.
✏️The opportune time for climate growth investing
Morgan Stanley
PE growth investing targets fast-growing, resilient businesses, thriving in current markets with focus on attractive opportunities in climate solution sectors driven by major trends.
📝 Why tech will remain a top priority
UBS
Quick take on why tech still works for private equity despite market downturns, with focus on cloud solutions and digital payments.
🎥 Q&A with Chris James: The evolution of private equity
Blackstone
Chris James (COO, Tactical Opportunities) shares his perspective on private equity's future and emphasizes the significance of active management.
🎥 The private equity investor of the future
Institutional Investor
Allocators want to actively manage their PE portfolios, and are exploring multiple strategies including automatic secondary and third-party leverage.
PRIVATE CREDIT x FIXED INCOME
📝 Capital Solutions: An all-weather opportunity set
Arcmont
This paper highlights the opportunities available for flexible investors and shares how well-positioned, versatile strategies can be used to navigate these evolving dynamics with strong risk-adjusted returns across market cycles.
📝 Waiting for the storm: private credit mid-year outlook
LGIM
The private credit market is robust in 2023, favoring high-quality assets amid tighter conditions and higher yields. Higher rates have boosted the performance of short-dated assets but have also enhanced the attractiveness of longer-dated assets.
📝 Navigating the "higher-for-longer" environment
Partners Group
Emerging opportunities in private equity and real estate, with infrastructure gains from key trends, despite ESG challenges. Advanced technologies like AI offer potential medium-term benefits.
✏️ Balancing act: Building private credit portfolios
Goldman Sachs
Private credit's growth to a $1.9 trillion asset class encourages investors to diversify risk and select managers carefully for dedicated portfolio allocations.
✏️ Blue Bonds: The new kid on the block in sustainable debt
Man Institute
In Sep 2023, the ICMA released the first guidance on blue bonds, a nascent debt instrument for financing ocean-conservation projects, signaling its growing importance and potential to mirror green bonds' success.
📝 Fixed income perspectives
Principal Asset Management
Heading into Q4 2023, fixed income investors have opportunities despite recession uncertainties. Hawkish policies could sustain high front-end yields, while credit spreads may widen as recession risks increase, signaling further economic slowdown.
📝 Four reasons high yield is more resilient today
Barings
The high yield bond market has transformed significantly in the past decade, evolving into a more resilient, higher-quality market better equipped to withstand potential economic downturns.
🎙 Compelling credit options: credit crunch
Oaktree x Bloomberg
Armen Panossian (Head, Performing Credit) analyzes the mismatch between private credit supply and equity demand, and discusses growth opportunities in private credit.
SECTOR FOCUS
✏️ Real estate outlook Q4 2023
Abrdn
Europe's real estate faces further value declines until mid-2024; focus on logistics, living sectors, and alternatives, with low supply aiding income growth. The UK RE market prospects are cautiously optimistic for 2024, with investors favoring sectors with long-term growth potential. APAC's varied policy outlook suggests long-term rate decreases, while China's economic slowdown impacts global markets, pressuring near-term capital returns.
✏️ The smart value-add investor – 2024 edition
Nuveen
In 2022, real estate investors, inspired by past successes, raised capital but have been hesitant to invest due to the market downturn caused by high interest rates, necessitating new investment strategies. Nuveen provides key steps to navigate the markets in 2024.
📝 WealthTech in Asia–Pacific
McKinsey
WealthTechs in APAC could be a c.$81 trillion onshore opportunity by 2027 and by leveraging technology they can tap into the evolving wealth management sector, offering expanded services to a broader range of customers and financial institutions.
📝 Climate change is here and so is the need to embrace sustainability in real estate
Morgan Stanley
$290 billion raised in green bonds in 2020 with $76 billion for green buildings. Morgan Stanley stresses the increasing importance of integrating ESG factors into real estate value assessments.
📝 Building a low-carbon future through alternatives
Nuveen
Incorporating innovation in real asset portfolios is key to advancing towards a low-carbon economy - opportunity areas include decarbonization of heat and battery storage, data management, energy efficiency and generation technologies, green hydrogen etc.
📝 Net zero investment portfolios: The core-satellite approach
Amundi
This paper explores the core-satellite approach in net-zero investment, contrasting with the integrated approach to better manage portfolio decarbonization and finance the low-carbon transition.
📝 The battery value-chain
LGIM
Batteries, vital for electrification and grid storage, are driving decarbonization with surging demand, impacting the entire value chain.
📝 Driving sustainable growth
Goldman Sachs x PEI
Experts from Goldman Sachs highlight the dual benefits of climate transition and inclusive growth: strong returns and sustainability impact.
🎙 US real estate equity: Today & tomorrow
Barings
Barings explores whether the pessimism surrounding commercial real estate is justified and how future real estate equity portfolios may drastically evolve.
MACRO AND MULTI-ASSET VIEWS
📝 Outlook for private markets
Apollo Global
Global private capital AUM at $13 trillion with $5 trillion in private equity and $1.5 trillion in private credit. A great data source providing detailed insights into the global private markets.
📝 Broadening Access to Private Markets
World Economic Forum
WEF’s report presents explores ways industry participants and policy-makers can broaden access to private markets while ensuring proper guardrails and creating potential diversification and other performance benefits to retail portfolios.
📝 Global outlook Q4 2023 update
Blackrock
BII report outlays that bond yields hit 16-year highs as markets adapt to a new regime marked by increased macro volatility, focusing on long-term structural shifts.
📝 Monthly market monitor
Morgan Stanley
A quick and concise view of economic and market data, connecting market shifts with investment impacts across asset classes.
✏️ Real asset megatrends: Global trends shaping investment opportunities
M&G Investments
Megatrends such as energy transition, digitization, and food systems are reshaping the global landscape, offering investors opportunities through tangible, valuable real assets.
📝 Q4 2023 Asset Allocation Outlook: Let's do the time warp again
LGIM
LGIM’s latest outlook explores the uncertainty of an anticipated recession, suggesting continued caution is necessary across asset classes.
✏️ State of private markets Q3 2023
Carta
Venture capital in Q3 2023 continued its downturn, with funding and rounds decreasing, yet startups saw higher valuations and less dilution. Investors remain selective, maintaining high standards for deal-making.
✏️ ELTIF 2.0: what does it mean for investors?
Schroders
ELTIF 2.0 offers streamlined access to private assets, addressing challenges and building on the original regulation's framework.
✏️ Advisors, asset managers bank on alternative investment growth at CAIS Summit
Wealthmanagement.com
Retail investor interest in alternative investments is rising, but how does that translates into real investment activity? Alternative asset classes and fund structures remain a difficult space for advisors with no knowledge or experience.
🎥 Alternatives for the 60/40 portfolio: Implementation considerations
Goldman Sachs
Candice Tse (Global Head, Strategic Advisory) and Juliana Hadas (Portfolio Solutions for Alternatives Capital Markets and Strategy) explore the decline of the "60/40 portfolio," traditionally a moderate risk benchmark, which faced one of its worst years in 2022.
🎙 Full return world with Howard Marks and Armen Panossian
Oaktree
In their podcast, Howard Marks (Co-Chairman) and Armen Panossian (Head, Performing Credit) analyze current investment trends and risks, including insights from Howard's memo.
🎥 Year-end planning opportunities for investors
PIMCO
Discussion points in the fourth quarter - investors and advisors should strategize and plan for the next year.
🎥 3 key questions facing private markets investors as we look into 2024
ICG
Quick view on three critical topics: the nature of the upcoming economic landing, the future trajectory of inflation and interest rates, and their implications for private market investors.
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