Elm Capital: Private Markets Review – March 2021
- Deal activity and confidence in private markets continued to improve, driven by the positive sentiment created by the distribution of effective vaccines to combat the Covid-19 pandemic:
- The fundraising environment has remained robust with managers in the middle of ongoing fundraisings continuing despite the logistical challenges related to in-person meetings, and others preparing the launch of scheduled raises in 2021. Sector expertise is increasingly valued by investors and more managers are making sustainability and ESG factors an important part of their investment strategy.
- Beyond the headline grabbing large-cap GP-led transactions, the market is vibrant with significant level of activity that is less publicised in the wider market, with managers utilising the secondary market to offer liquidity solutions, negotiate extensions and modify terms with their LPs.
- LPs, to a large extent, have kept their pipelines busy with existing primary relationships or managers in their target list that they have tracked for several fund generations.
- Re-rating of NAVs and supportive pricing optics have motivated the resumption of LP-led portfolio management activities. A year into the pandemic, buyers are now better equipped to assess Covid-19 risk and appetite for diversified portfolios has returned.
- Secondary market pricing for buyout and venture interests displayed divergent trends in H2-2020, with buyout pricing rebounding while venture continued to trend lower. Buyer focus in H2-2020 remained on resilient assets and experienced managers that commanded higher pricing, whilst Elm continued to see a reduction of market activity in tail-end vintages.
- In 2020, Elm Capital’s clients have successfully converted on new investor commitments, with Montefiore Investment V in France closing at its hard cap, MVI Fund II in the Nordics reaching its first closing, Kester Capital II in the UK closing at the hard cap, Armada Fund V in the Nordics closing on substantial new investor commitments, and Aksìa Capital V in Italy exceeding its target size. Elm Capital continued to successfully execute and close LP portfolio sales and GP-led transactions into year-end 2020. Most notably we advised on Project Hexagon, one of the first GP-led transactions into an evergreen vehicle in the infrastructure space.
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