Caution in Private Markets

Caution in Private Markets


European private equity and venture capital markets are going from strength to strength.

Given record-low interest rates and stock market volatility, which doesn’t seem to be going away anytime soon, investors remain keen to increase their allocation to the private markets and real assets. Consequently, the European private equity and venture capital markets are going from strength to strength, heavily backed by recent record successes. This, in spite of increased political uncertainty within major European economies, not to mention the impending Brexit deadline.
According to Preqin, Europe based private equity AUM equate to a record €559 billion as at the end of June 2018 and dry powder held by Europe based managers eagerly stands in line at €211 billion for the same period. High valuations and the strong desire to deploy this capital signals a cautious approach is in order. Sourcing good quality deal flow which is priced sensibly is becoming tougher.
This is where companies looking to raise quality capital can increase their odds of being successful. A motivated management team working in tandem, which is continually seeking to enhance operational efficiencies, expand their footprint into well researched international markets will do well. Adaptability is also vital, given the fast-changing environment the company finds itself in as it grows rapidly plus its ability to attract the right mix of talent to drive forward the growth strategy.
As for investors and LPs, the ability to attract such portfolio companies is crucial. Once drawn in, the key will be to drive value creation by using novel and original methods.

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