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AlphaWeek 15 September 2020

There are exchange-listed products which offer investors of all types and sizes access to underlying private equity funds. In private equity, the fund sizes raised by even the smaller end of that industry are comparatively large with high minimum investments, further limiting the ability of individual investors to get exposure to these opportunities regardless of whether they meet the accredited investor or qualified purchaser threshold.


“Most retail investors in the US and elsewhere simply don’t have access to the best performing private equity funds partly because the scale of capital needed to participate is too high. Also, they don’t want the illiquidity of cash tied up for a decade or more,” said Deborah Botwood Smith, Chief Executive of U.K.-based trade association Listed Private Capital.

Botwood Smith says that the public markets can solve these issues.

“Listed private equity offers a solution to this problem. Anybody can easily participate in the upside of private equity by buying shares in listed private equity, while also gaining access to a diversified pool of private equity opportunities.”

Changes in the way that private companies raise money and the investment opportunities that private equity provides exposure to means that, for Botwood Smith, accessing underlying private equity funds via the public markets has never been more appealing.

“Since the shares of the funds are listed, they also provide a liquid way for investors to participate in exciting and high growth sectors. For example, listed private equity provides public access to growing, disruptive and innovative companies. In today’s economic climate, large chunks of high growth sectors such as fin tech, education and life sciences remain off public markets for longer - they can raise the capital they need in the private markets and, as a result, much of the value creation is achieved pre-IPO. And some never need to come to market at all. Private equity doesn’t just bring capital but experience in business-building and improving operations, plus a longer-term perspective – this is attractive to management teams and better suits many types of businesses,” she said.