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Asset management roundup: LP, GP competition for assets 'at peak'

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Competition for private equity assets between investors and managers has peaked, according to the latest bi-annual global private equity survey by Coller Capital.

The proportion of asset owners making private equity co-investments has nearly doubled in the last decade, but the proportion making investments without a general partner (GP) as sponsor has not changed much in recent years, according to the survey report.

An investor preference for specialists was becoming stronger, with a quarter of limited partners (LPs) planning to shift the balance of their private equity commitments further towards single-product specialists.

Coller Capital also reported that 82% of LPs expected to achieve annual net returns of more than 11% across their private equity portfolios over the next three to five years; 17% were forecasting returns of over 16%.

The survey found that international investors were increasingly comfortable with domestic Chinese managers for exposure to the country: almost a quarter of European LPs said they were now more likely to choose domestic Chinese GPs than they were three years ago.

The proportion of LPs committing to China-specific private equity funds was due to hold steady, responses indicated.

The barometer was based the plans and opinions of 110 private equity investors based in North America, Europe, the Middle East and Asia Pacific. Pension plans made up 38% of the respondents. Banks and asset managers were the next biggest group.

lp direct vs co investments

Source: Coller Capital Private Equity Barometer, winter 2017

‘$1trn in systematic strategies’ 

Investors have an estimated $1trn (€844bn) of assets allocated to systematic factor strategies, double the amount in 2014, according to a new survey report.

For MJ Hudson Allenbridge, which carried the survey and produced the report, systematic strategies include long-only smart beta and long-short alternative beta strategies.

The latter represented the majority of assets in strategies offered by investment banks. The consultancy’s review, an update on a survey carried out in 2014, encompassed offerings of both asset managers and investment banks.

Pension funds were the largest source of assets for each group, with asset managers having become the second largest client group for investment banks. 

The consultancy said asset managers’ fees had remained “reasonably constant” since its 2014 survey, but that average investment bank strategy fees had dropped by 10-15 basis points.

Participants – 21 asset managers and 11 investment banks – identified future performance of systematic strategies as their biggest concern, said MJ Hudson Allenbridge.

Many respondents noted the wide dispersion of realised strategy returns, as well as investor expectations towards the strategies.

Other concerns included possible crowding and front-running of transparent factor strategies.

There was a broad consensus that the industry still lacked a coherent, common terminology, and that investors’ challenges in evaluating strategies were accentuated by the lack of recognised performance benchmarks.

The full report can be found here

French partnership, new funds 

In other news, La Financière de l’Echiquier and Primonial have agreed to join forces in a move that would create a €10bn-plus retail and institutional asset manager in France.

Under the agreement, €8bn La Financière de l’Echiquier is to acquire the asset management activities of Primonial, AltaRocca Asset Management and Stamina Asset Management, all of which currently operate under the Primonial Investment Managers brand name. Primonial is to acquire a 40% stake in La Financière de l’Echiquier.

Completion would see La Financière de l’Echiquier managing more than €10bn in assets, strengthening its position as a key player among the top five independent asset management companies in France.

Separately, recent asset manager fund launches include Parvest Disruptive Technology, a BNP Paribas Asset Management fund investing in companies that are leaders in or beneficiaries of transformational technology, and a “shadow activist” fund from Skagen.

The Scandinavian asset manager’s fund invests in the equity of companies subject to activist campaigns. Skagen is due to be bought by Storebrand, one of Norway’s largest pension providers, under a recently announced agreement. 

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