Partners Group has added private markets royalties as a fifth asset class alongside private equity, infrastructure, private credit, and real estate.
The firm said it is leveraging its global platform ”to build the first dedicated, scalable multi-sector royalty offering” that invests in both well-established royalty sectors, such as intellectual property assets across the pharmaceuticals and entertainment industries, as well as emerging high-growth royalty sectors like the energy transition, sports, and brands.
Juri Jenkner, partner and president at Partners Group, said: “We have high conviction in private markets royalties as an asset class that complements our existing private markets offerings. Royalties have seen strong growth in recent years, with greater applicability across the economy, including in many of our target private equity and infrastructure themes such as healthcare and the energy transition.”
Partners Group research estimates the total private markets royalty market to be worth more than $1trn (€918bn) today and forecasts further rapid growth.
The private equity firm added that private markets royalties “can offer attractive risk-adjusted returns, long-term predictable cash flows, low correlation to broader markets, and a hedge against inflation”. The firm believes royalty assets can be an effective tool for stabilising and diversifying traditional private markets portfolios.
Royalties will be made available to Partners Group’s investors through the firm’s range of bespoke solutions, which includes its tailored mandate solutions for existing and new institutional clients and its structured private wealth products.
The firm plans to offer the strategy in an evergreen fund structure that could be eligible for investment by private wealth investors, who currently have limited opportunities to gain exposure to private markets royalties.
Stephen Otter, managing director and head of private markets royalties at Partners Group, said: “In building out our private markets royalty business, we are differentiating from the industry standard on two key points. Firstly, by considering a larger set of royalty opportunities across sectors, we will play to Partners Group’s strength of applying a relative value approach to selecting the most attractive investment opportunities for our clients.
“Secondly, by using an evergreen structure instead of a closed-end fund, our client offerings will be better aligned to the longer duration of the underlying royalty investments.”
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