Insights
By: Richard Hill
Private capital - a great way of involving the next generation
Our Partner – Private Markets Advisory talks private direct investments and the evolution of an industry.
There are a number of attractions of private direct investment for clients. For some it is the ability to self-select, retain autonomy to an extent and make investment decisions themselves, rather than delegating authority to a third party. For others it is about being hands-on, using the professional experience they have developed in their own careers. There are also those seeking higher returns in a low return environment, although they need to understand that the risks are higher as well; it is about balancing that.
Successful entrepreneurs tend to gravitate towards their own sector. That is very relevant for us when it comes to the hunt for investment opportunities. It also has the potential to be hugely valuable to the investee companies themselves. Entrepreneurs are keen to ‘give back’ and use their experience to help other businesses. Once we work out where a client’s interests lie, what motivates them and their tolerance for the risks and realities of investing into private companies, we can start identifying suitable investment opportunities for that client.
Private capital investing can be a great way of involving the next generation. We have worked with many clients for whom bringing the next generation into private equity investing experience can be a hugely valuable exercise. It gives them the ability to learn how a business works.
Being an international multi family office puts us in a unique position. We have multifaceted relationships with our clients and any direct private investing is approached from the point of view of its fitting in with their overall profile and what they are looking to achieve. We are never selling a particular product or service and that’s what differentiates our offer.
The marketplace for private capital is growing and evolving. Family offices are playing a significant part in that evolution. They are increasingly looking to allocate capital to private equity - be it co-investments, private equity funds, or direct investments - for a number of different reasons. I think they will continue to do that. It has become a much more mainstream topic of conversation and private clients are equipping themselves to be able to participate. The market is professionalising and I think it will continue to do so.
Richard Hill is Chief Executive of Stonehage Fleming Corporate Finance
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