LPeC's Annual Market Review – Accessing growth opportunities in the 2020s – explains the investment opportunity in listed private equity and, in particular, why it matters for retail and private wealth investors.
The value of global private equity assets has increased seven-fold in the last twenty years to approximately £3.1 trillion as investors sit on record paper profits. In the ten years ending 2019, listed private equity has outperformed global stock markets by over a third, post-fees and charges even allowing for the superior dividend income from global equities. Allocation to a portfolio of companies typically held by listed private equity managers is also proven to provide compelling opportunities for real capital growth, with nearly half of their underlying value derived from earnings growth, not financial engineering. Yet, for every £40 of client money held by wealth managers, only £1 is allocated to private equity. This is because retail and private wealth investors frequently assume private equity is the preserve of large institutional investors, sovereign wealth funds and super-high-net-worth individuals. But private capital is no longer an exclusive club. The dedicated UK listed private equity market is now worth a combined £25.2 billion by market value. It provides an entry point to a carefully selected and managed curation of illiquid stakes in some of the world’s most promising growth companies, often in subsectors not available on public markets.