Conference Presentation, Panel, Fireside Chat
Institutional Investors: Stewarding Long-Term Assets
- Partners Group forecasts valuations to decline by approximately 10 percent over the next five years in its base case, while projecting private market returns to exceed public market returns by 3 to 5 percent over the same horizon.
- Partners Group anticipates industry private equity returns averaging 10 percent, with its own funds expected to outperform this benchmark by 300 to 500 basis points.
- CPP Investments projects asset growth from approximately $400 billion CAD currently to a range of $1 trillion to $2 trillion CAD in the future.
- CPP Investments plans to focus up to one-third of its portfolio on emerging markets between now and 2025, with the majority of those investments concentrated in Asia.
- Alan Carrier projects a capital shift of $1 trillion to $5 trillion over the last 10 to 15 years as talent increasingly favors private markets due to governance focus and competition.
- PSP Investments forecasts doubling its size within 10 years and doubling again in the subsequent decade, though net inflows are expected to turn negative at some point within the next 10 years.
- PSP Investments expects continued fund growth despite reduced net inflows, driven by returns exceeding payouts, and plans to increase private market allocations, albeit not to the levels of Omer's.
- Omer's projects doubling total assets to $200 billion over the next 8 to 10 years and plans to increase its Singapore region allocation from roughly $10 billion to $35 billion to $40 billion over 10 years.
- Omer's intends to expand its regional office headcount from 15 to 50 people within the next 24 months.
- Omer's plans to reduce exposure to Canada and the US while increasing allocations to India, Asia, and Australia to better proxy the global economy.
- Cathay Financial Holdings intends to grow its alternative investment allocation, currently capped at 3 percent of invested assets, and plans to transition funds with strong long-term track records from satellite to core positions.
- Cathay Financial Holdings expects to improve asset allocation balance as liability costs decline, potentially allowing for lower guarantee rates for policyholders, while favoring public companies with strong ESG practices and transparency.
- Neil Cunningham notes that while cap rates may expand or multiples may decrease for mid-market portfolios, market reality may prevent acting on these assumptions.
- Alan Carrier asserts that high-quality assets will likely experience cap rate diminution and multiple expansion, noting that capital value may be higher in the future than today.
- Blake Hutchinson projects the number of public businesses will halve over the next 15 to 20 years, further fueling the shift toward private markets.
- Blake Hutchinson warns that if central banks lower deposit rates and credit spreads narrow, banks may shift to safer credit, pushing more companies toward private equity firms.
- Blake Hutchinson and Alan Carrier highlight risks of social instability and international friction arising from waning management discipline and a lack of proper risk pricing.
- Alan Carrier predicts that performance in private markets may not sustain past magnitudes due to increased competition, while also identifying the retention of talent and "social skills" as primary challenges.
- Blake Hutchinson suggests that active investors deeply deployed globally will likely find long-term value creation opportunities during times of market dislocation.