Overheard at SuperInvestor

Experts share their insights on today's market opportunities & more

On reasons to be less gloomy

“The world is adjusting to a new normal as it comes off the zero band for interest rates and as geopolitical uncertainty has risen. Yet by the end of 2023, things may well look better. We have seen the relaxation of Covid controls in China – which may stoke inflation a little in the short term, but it’s a fundamentally good thing for the global economy – and we may be close to the peak of US inflation. At the same time, November’s G20 summit was one of the most important for a while. There were strong and unified messages coming out of it, especially around Ukraine. That would have been challenging to achieve and it signals pressure on a global scale to bring an end to the conflict in Ukraine, which would be transformational on the inflation outlook.”

George Osborne, former UK Chancellor of the Exchequer, Founding Partner at 9Yards Capital

On the importance of staying in the game

“Right now, LPs may well feel as though the best thing to do is run and hide, but we now know, with so much historical data to back this up, that is the wrong thing to do. That is because investments made in the years following an economic slowdown tend to benefit from lower entry multiples and faster top-line growth in the recovery phase. We have seen instances where LPs cut or paused their private markets investment programmes back in 2008, while others with similar programmes carried on investing. There are still differences in performance between these today, with LPs that remained in the market continuing to outperform those that stopped. Moving out of the market has a big impact potentially – and a lasting one.”

Ruulke Bagijn, Head of Carlyle Global Investment Solutions, Carlyle

On market opportunities today

“We are excited about small-cap technology buy-outs – funds in this space are acquiring VC-backed companies and they are doing tremendously well. This trend will continue to persist as VC-backed businesses move from pursuing growth to prioritising profitability. Investors that can collaborate with VC and buy-out managers in this space may see attractive returns stemming from the transition from minority investments to majority, control positions.”

Lindsay Sharma, Managing Director at Industry Ventures

On the speed of fundraising market change

“We have gone through a remarkable transition. In the space of just three months, we have moved from a period like the first half of 2008 to one like mid-2012. It’s an incredible shift and it’s difficult for GPs to get their heads around it. We had some very successful fundraisings completed in early 2022 and then suddenly, capital retrenched, which has had major consequences for what GPs can achieve. We are not in 2009 – LPs are continuing to invest – but they are being very discerning and are paring back their re-up decisions.”

Adam Turtle, Partner at Rede Partners

On GP-led deals

“A hammer can be a useful tool; it can also be a weapon. It depends on the detail of how you use it. We’ve seen instances when a continuation fund has been exactly the right course of action; we’ve also seen examples where really it hasn’t and the incentives have been all wrong.”

Tom Rotherham-Winqvist, Managing Director at Wafra Europe

On first-time funds

“There will be some great opportunities for first-time funds over the coming period. The fundraising environment may be tough, but these managers won’t have the problem of dealing with existing and legacy portfolios – they can just focus on fresh, high-quality deals. For LPs, these may offer some very attractive co-investment deals. The kind of relationship you can build with a first-time fund also makes them interesting – it’s different from that with existing fund managers, because you helped put them in business.”

Akhilan Nesaratnam, Vice President at StepStone Group