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Our strategies typically have high transactional content (secondaries and co-investments) minimizing the j-curve and the total expense ratio for the benefit of our investors.

Markus Benzler, Head of Multi-Managers Private Equity

The Multi-Managers Private Equity (MMPE) business has developed into a core capability of the Real Estate & Private Markets business. It offers extensive private equity expertise to institutional investors such as pension funds, family offices, insurances and sovereigns. MMPE’s offering comprises both individually tailored and managed accounts as well as illiquid and semi-liquid private equity investment strategies that typically invest globally into primaries, secondaries and co-investments.

Thereby, we closely support our clients during the build-up and maintenance of their private equity allocation, offering broad diversification benefits and the ability to generate growth while fine-tuning their total-expense ratio, portfolio build-up, risk/return and portfolio allocation targets through secondaries and co-investments.

There are basically three ways to access private equity. One could think that the simplest approach is to invest directly into privately held companies. However, this requires a strong level of for example transactional, managerial and sectoral expertise, especially for non-institutionalized investors, as this increases the concentration and headline risk around single companies.

Therefore, a lot of investors try to invest via fund managers into this space. The fund managers bring along the expertise and a certain level of diversification. Historically, we have seen that the best fund managers (usually in the top quartile) are capable of consistently outperforming, when measured against typical (listed) equity benchmarks. The issue with these types of managers is that they are usually not in need of additional capital as their strategies are only scalable to a certain extent (in comparison to more liquid strategies).

Multi-manager platforms can solve the riddles arising from the aforementioned dynamics: a good multi-manager set-up can provide access to some of the best fund managers either via primaries or secondaries and can participate into direct deals as a co-investor. This provides solid diversification but also ensures quality and execution capacities that only professional private equity investors can deliver.

Firstly, it’s worth mentioning that the drivers behind public equity are different from those behind private equity.

While the former is mainly driven by macroeconomic factors (such as interest rates, GDP, market sentiment, etc.), the latter is often underpinned by cutting-edge technology, innovative business models and managers – in a good number of cases public market equivalents do not yet exist.

These companies, usually unlisted, want to stay private to preserve their operability and incur less restrictions than public companies. Many private equity investors are recognizing the strategic involvement and management they can unlock when considering these companies.

In addition, investors usually have plenty of choice in terms of strategies to consider: small to medium-buyout, large buyout, mega buyout, seed stage, early stage and late-stage venture capital along with growth strategies. From our investors, we often hear that today they can achieve with private markets what they were able to achieve with small-cap public market investments some 10-20 years ago. In fact, a lot of the return potential from small-cap public markets has shifted to private markets.