Despite challenging financial markets, private investors have shown a healthy appetite for private equity and commercial property deals, says UK private investor syndicator, Hotbed.
Despite challenging financial markets, private investors have shown a healthy appetite for private equity and commercial property deals, says UK private investor syndicator, Hotbed.
In a recent survey of 320 high net worth individuals (HNWIs), Hotbed revealed that 67 per cent of those surveyed felt that now was a good time to increase their investments in unquoted companies or commercial property. Only 13 per cent disagreed.
Interestingly, 72 per cent said they expect private equity investments made now to return between 2.5 times and 3 times their money over three years, while 85 per cent of those surveyed said that they expect 10-20 per cent compound annual returns for UK commercial property investments over the same period.
Gary Robins, Hotbed chief executive, commented: “Despite, or rather because of the credit crunch’s impact on asset prices, private investors are very serious about increasing their exposure to private equity and commercial property investments. Not only do HNWIs recognise that alternative assets are an important component of a balanced portfolio, but they see the recent turbulence as a good buying opportunity.”
“HNWIs typically take a longer-term approach to investment and they feel that the impact of the credit crunch on asset prices is beginning to throw up opportunities. Compared to the recent volatility of the stock market, private equity investments must look like a shelter in the storm.”
Hotbed also found that over two thirds of HNWIs are interested in deals that produce an early yield.
Gary Robins added: “A lot of investors are looking to make private equity investments in companies that can start to pay back returns early either through dividend payments or some kind of debt instrument. Those investors see it as lower risk than just waiting for the final exit before they can recoup any of their investment.”
