By Susan Kil, Client Relationship Director, Funds, Netherlands
As a first-time attendee of SuperReturn International, which took place in Berlin last week, I was truly impressed by the high-quality content and industry insights presented as well as the wide variety of attendees from across the private equity sphere. The jam-packed conference covered a range of trending topics including ESG and disruptive technologies such as AI, but also standards such as fundraising strategies and deal sourcing. In this article, I share my key takeaways.
1. ESG considerations now critical in investment decision-making
Throughout the event, the need for fund managers to prioritise sustainability and social responsibility in their portfolios was emphasised, reflecting the growing demand from investors and regulators alike. It was clear from the presentations and discussions throughout the conference that ESG optimisation is now expected; it is no longer simply a nice-to-have. This was reinforced by further discussion on the potential for impact investing to drive positive social and environmental outcomes whilst generating attractive returns.
2. AI impacting the space
Another major trend discussed at the conference was the impact of disruptive technologies, such as artificial intelligence (AI), on the investment landscape. This topic is increasingly gaining traction as investors and managers look for ways to leverage technology to gain a competitive advantage in the market.
Speakers examined the potential for AI to revolutionise the way data is analysed and investment decisions are made, as well as its potential to disrupt traditional investment models. For example, using machine learning algorithms to analyse large amounts of financial data and identify patterns that can indicate potential investment opportunities. AI can also help private equity firms automate many of their processes, reducing costs and increasing efficiency, allowing them to focus less on administrative tasks and more on what they do best.
3. Strong potential in opening up private debt market to retail investors
A standout session was the lively panel discussion including our own Justin Partington, which discussed the retail market as an untapped universe for private markets and the opportunities this presents – particularly with respect to private debt. Indeed, the alternative funds industry is increasingly looking to welcome retail investors to the asset class as, according to Morgan Stanley 2021 research, these investors alone could provide approximately $1.5 trillion of AUM by 2025.
Also highlighted on this private debt themed panel were three key variables that have been determining the market: pandemic impact, geopolitical issues, and central bank monetary/fiscal policy. Going forward, we can expect an attractive market environment and improved risk-adjusted returns. Private debt instruments can offer higher yields than traditional fixed income investments. They can also offer benefits in diversification and are increasingly available through alternative investment platforms.
4. Women becoming more prominent in private equity
Another true SuperReturn highlight was the Women in Private Markets tea and networking event on Thursday afternoon, sponsored by Sagard. What an inspiring, diverse group of professional women. Reflecting on the lack of diversity when I first started in financial services, this event, and those like it, are evidence that women are claiming their spot in this industry. And it’s certainly in the industry’s best interests, as a 2022 McKinsey study found that CIOs of leading institutional investors said they would allocate twice as much capital to the more gender diverse private equity firm, if choosing between two otherwise comparable firms.
5. Everything we need to know about the world, in a nutshell
I particularly enjoyed David Rubenstein’s closing keynote presentation on “Everything you need to know about the world in 45 minutes”. Rubenstein is a legendary figure in the industry as co-founder and co-executive of the Carlyle Group and his insights into the latest trends and developments were invaluable. Overall, his message was very positive; he feels the worst of the turmoil has passed in banking sector, and that recession is less likely in the short term.
SuperReturn International was an excellent conference that provided valuable insights into the latest trends and developments in the private equity industry. The sessions on ESG considerations and disruptive technologies were particularly informative, and it was clear that both will continue to shape the industry in the coming years.
