The Corona crisis has left its mark on the private equity industry, according to FERI. Although the market was able to recover after the decline in transactions in the first half of 2020 during the rest of the year. However, investments have remained below the average of previous years due to the corona. This continues a trend that has been in place for some time. "Capital commitments have long been well above actual investments. In 2020, the private equity industry is again expected to have accumulated approximately $200 billion in additional 'dry powder' globally. This further increases investment pressure," says Ahmet Peker, Head of Institutional Clients Germany FERI Trust GmbH.
As investor demand for off-market investments continues unabated, a further increase in "dry powder" must be expected. This would have a direct impact on investment returns. "Performance data for the European markets show that the yield advantage of private equity over the equity market has shrunk in recent years. This is because higher demand has not been matched by a corresponding supply. Rising prices and falling returns are therefore inevitable in the long term," explains Peker. In the future, it will become increasingly difficult to meet investors' yield expectations with buy-outs, especially in mainstream concepts. The same applies to other segments of the private markets. "The solution is to invest in selected sub-segments of the market. There, valuations are not as high yet. This offers investors an attractive risk-return profile if positioned early," says Peker. The diversification and deepening of asset allocation will therefore continue to increase in this area, as has historically been the case in other asset classes, driven by returns.
FERI has been successfully investing in specialised private equity funds with a clear competitive advantage in the respective market segment for more than ten years. In real estate and infrastructure, the focus is on value-add strategies. FERI thus enables institutional investors to enter into particularly selective and sophisticated investment strategies that have not yet been discovered by the broad market.
Member of the Management Board
Corporate Strategy, Marketing and Communications
FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg
T +49 (0) 6172 916-3192
F +49 (0) 6172 916-1192
presse@feri.de
FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg
T +49 (0) 6172 916-3192
F +49 (0) 6172 916-1192
presse@feri.de
FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg
