by Andrés Ramos, Content Marketing Specialist – Nasdaq Private Fund Solutions
Insights from Austin
Last week, members of the Nasdaq eVestment team attended The Private Markets Texas Meeting in Austin, Texas. The event brought together over 250 Texas-based LPs and GPs for a series of panels and networking on the allocations, investment opportunities, and performance of private markets strategies in the current economic environment.
Here are some of the key takeaways for private fund managers from the event:
Private debt in the spotlight
One of the biggest topics discussed over the course of the event was private debt. Given the current public market downturn and high interest rate environment, asset owners are looking to add more fixed income and structured debt products to their portfolios through opportunistic investing. This suggests that private debt managers will see more interest in their offerings on the fundraising trail moving into 2023. According to the Nasdaq eVestment Forward Calendar, there are already 36 private debt funds confirmed or projected to be fundraising for a first close in 2023. Direct lending strategies are seeking to raise over $23 billion while distressed debt strategies are targeting nearly $13 billion.
Fund managers pivot at their own risk
On the other side of the table, private equity buyout managers are finding it more challenging to find financing for buyouts. As an alternative, these GPs are pivoting to debt financing and raising private debt funds. Fund managers considering such a pivot must be wary of how this maneuver is perceived by potential and current investors. Private equity GPs seeking to raise new private debt funds must avoid creating the perception that they are either losing focus on or unable to raise money in their flagship buyout strategies.
Demand for the US Dollar
On top of general market volatility, LP investors are also increasingly concerned with and interested in their currency exposures and the degree to which fund managers are using currency hedging. While the US dollar maintains it strength against the Euro and major currencies, fund managers should be prepared to answer questions on the topic on a regular basis moving forward.
Strength in stability
Above all institutional investors at the event emphasized the importance of strong, stable teams in their portfolios. Understanding team dynamics and how fund managers are navigating the current market has helped reassure investors that their fund managers are the right stewards for their capital despite short-term challenges. GPs should be especially focused on active communication in the current environment to ensure their LPs continue to have faith in their asset management abilities. When facilitating new relationships fund managers should focus on highlighting their experience and learnings from investing through different stages of a market cycle. This demonstrates their ability to guide investor capital through difficult periods successfully.