Why Private Markets Investments?
Private Markets are able to generate, on average, higher long-term returns than most liquid asset classes.
These returns are boosted by outperformance from value-add by private markets asset managers who work with management teams to grow earnings faster than we would typically see in public market asset classes, where we believe outperformance is a zero-sum game.
Private companies, for example, typically see their earnings growing faster than their public company counterparts based on their ability to focus on optimising the long-term value of the business, rather than focusing on short term quarterly earnings announcements. Economic incentives can be more easily aligned between company management and shareholders in the private markets world.
Our founders began investing in private markets via private equity investments in the early 1980s. As such, have extensive experience in evaluating how private markets behave in various stages of the economic cycle.
In today’s rising rate environment investors cannot continue to rely on low-cost covenant light leverage to drive returns. We strongly believe that private market investment returns will be primarily driven by asset owner value add.
For those able to commit to investment timelines of five years or more, history has demonstrated that private market investments can generate higher average returns.
Our Private Markets Investment Offerings
Our private markets investments include allocations to private equity, venture capital, private debt and real estate. Within private equity, we invest in leveraged buyouts and growth equity. Our sustainable investing activities cross all of these asset classes. Similarly, we are actively pursuing low or no-fee co-investments with our asset managers across all private market asset classes.
Private Equity
We are specialists in lower middle market buyouts. We believe that the future of private equity is no longer about leverage and multiple expansion – it is about Post-Acquisition Operating Value Add (PAOVA). We go deep on buyout firms in our manager due diligence to look for extraordinary in-house operating performance improvement capabilities, with the most efficient and effective delivery processes to portfolio company management teams. We have over $6.5 billion1 in net asset value invested in private equity.
Venture Capital
We have actively invested in venture capital since the beginning of our private equity program in 2004. In aggregate, we have committed approximately $2 billion to venture capital managers and $1.5 billion to technology-focused growth equity and buyout managers.1
Uncorrelated Strategies
Uncorrelated strategies offers returns driven by outcomes that have little or no relationship to financial market movements. We believe this is an important source of returns as we enter a period of higher economic and market volatility. We have $0.6 billion in NAV invested in uncorrelated strategies.1
Private Debt
Private debt investing offers meaningful yield premium and generally better legal and structural protections than liquid credit assets. We have $3.6 billion in net asset value invested in private debt.1
Real Estate
Our real estate investing covers all geographic markets and all sectors including industrial, residential, office, retail, hospitality and other niche sectors. We focus on the “buy, fix, sell” approach, partnering with vertically integrated managers and regionally focused specialist opportunistic funds (or private equity real estate ‘PERE’ funds).
Sustainable Private Investments
Private markets investing provides some of the greatest opportunities for environmental and social impact. We believe that the most attractive investments are in the environmental space and are those that are pivotal to the energy transition. Read our Partners Capital Global Energy Transition Investment Framework.
Co-Investments
Private markets co-investments provide significant reduction in look-through cost of private markets programs. They also offer potential deal selection outperformance (alpha).
1 As at 31 December 2022
How do we build Private Markets portfolios?
Our private markets portfolios are constructed with defined target allocations across the sub-asset classes, as well as within each sub-asset class. Specific allocation targets are set for geographic, sector, primary vs. secondary private equity and direct private co-investment exposure. Allocations are based on expected long-term returns, the risks and return correlations for each asset class and sub-strategy.
Illustrative $500M Private Markets Portfolio Construction
Actual portfolio will vary by client depending on their non-private markets portfolio, risk appetite, ESG considerations, liquidity constraints amongst other factors.
How do we work with our clients?
We implement private markets portfolios for clients in two ways:
Bespoke Portfolios: best suited for investors with the requisite scale, investing directly in underlying funds and co-investments, either held directly or via a “Fund of One” structure.
Pooled Vehicles: best suited for clients aiming for operational simplicity and/or those without the required scale to meet the minimum investment thresholds of direct fund investments. Partners Capital manages multi-manager pooled vehicle across private equity, private debt, venture and co-investments. In 2022 we launched our inaugural private equity environmental impact fund, Partners Capital 15 degrees Fund, LP.
Why should you partner with Partners Capital?
Tailored Solutions
Each client’s private markets portfolio is customised taking into consideration their overall portfolio performance and risk objectives.
Team and Network
Partners Capital’s founders have been investing in private equity since the early-1980s. Many of our shareholders are veteran private equity professionals and a proportion of our clients are successful private equity professionals. Additionally, we recruit investors from the most highly respected firms in the belief that it takes one to know one.
Sourcing and Access
Ability to leverage our network to source and gain access to who we believe to be the best private markets managers. We partner with managers as a sophisticated LP, with a long-term outlook and potential value add to their business. This can result in better access to rare manager capacity.
Sufficient Scale
We are of a sufficient size to negotiate meaningful fee savings through co-investments, but not so large as to have to invest primarily with large funds, who may have outgrown their ability to generate outperformance.
Aligned Incentives
Our fees are linked to performance. Every member of our team invests alongside our clients. We provide transparency into our due diligence and prefer to engage with clients in a two-way knowledge share.
Full-Service Partner
With an extensive global operations team, we provide private markets clients hands-on support in managing capital calls, distributions, credit lines, etc. Reporting is highly transparent and we are focused on delivering a high return on investment.
Our Private Markets Team
Our broader private markets team of over 30 investment professionals are located across our seven offices, leveraging their local networks across our global footprint. All are experts in their dedicated asset class and recruited from the most highly respected firms in the belief that “it takes one to know one”.