Panel, Fireside Chat
Private Equity: A Continuing Evolution of Capital Access
Milken InstituteGlen August, Nazim Azimbaev, Maggie Finari, Ray Thorne, Andrew Weinberg, Mark O'Lean
- Bright Star Capital Partners targets annual gross returns of 25% or more (netting 20% or more for investors) by acquiring approximately two platforms annually while remaining highly selective.
- Bright Star Capital Partners anticipates capitalizing on a $30 trillion wealth transfer involving family-owned businesses that will occur over the next 30 years.
- Two Sigma (Sightway Capital) plans to develop a workforce integrating traditional investment professionals with data science, engineering, and finance experts to evolve its business model.
- Two Sigma (Sightway Capital) aims to leverage decision science and technical capabilities to grow asset-intensive portfolio companies into large enterprises and enable predictive decision-making regarding customers and asset underwriting.
- Two Sigma (Sightway Capital) forecasts that the convergence of AI, digital twins, and 5G will enable critical thinking and data-driven decision-making within portfolio companies within the next couple of years.
- Two Sigma (Sightway Capital) intends to utilize data science to model asset value fluctuations across different economic environments to construct durable portfolios.
- Ontario Teachers' Pension Plan intends to aggressively expand investment operations and opportunities outside of North America, with a specific focus on Asia and Europe.
- Ontario Teachers' Pension Plan is transitioning capital into late-stage venture and growth strategies, a program initiated approximately one year ago, to act as a minority investor for founders.
- Ontario Teachers' Pension Plan expects to identify pre-IPO opportunities involving families undergoing generational change, particularly in Europe, to serve as long-term shareholders in public markets.
- Ontario Teachers' Pension Plan plans to invest in disruptive sectors such as digital healthcare and climate change to hedge existing assets against technological disruption.
- Ontario Teachers' Pension Plan intends to use derivatives and other financial instruments to manage tail risks associated with potential inflation and policy changes.
- Ontario Teachers' Pension Plan seeks to build a portfolio capable of withstanding technological disruption by identifying strategic partners with a technological edge.
- NSE MBK (Kazakhstan Sovereign Wealth Fund) plans to increase its allocation to China to capitalize on current technological achievements and anticipated future growth.
- NSE MBK (Kazakhstan Sovereign Wealth Fund) expects potential disruption in infrastructure investments due to the sector's long-term nature.
- Oak Hill Advisors expects private credit in specific segments to generate double-digit returns with meaningfully less risk than equity.
- Oak Hill Advisors anticipates that substantially more capital will be allocated to private equity as returns in public equities and risk-free assets remain low.
- Oak Hill Advisors plans to focus on companies where capital is commoditized to provide operational know-how that drives growth beyond organic capabilities.
- Oak Hill Advisors expects to avoid sectors undergoing secular decline, such as retail, due to the difficulty of generating profits in those areas.
- Oak Hill Advisors plans to continue building relationships with traditional banks to navigate potential downturns while maintaining credit access.
- Oak Hill Advisors expects to find significant value in large-cap corporate private credit where banks are unwilling to take risk, aiming to lend at a 50% loan-to-value ratio while maintaining double-digit returns.
- Oak Hill Advisors expects cybersecurity risks, including major data breaches and crimes, to pose a significant threat to the financial system.
- Oak Hill Advisors anticipates that radical policy changes driven by income inequality and populism could occur globally, representing a major risk.
- Oak Hill Advisors expects the median return for top-tier private equity managers to be closer to 12-15% in the future, despite some firms targeting 20%.
- Oak Hill Advisors expects a public equity market failing to deliver high single-digit or double-digit returns would negatively impact private equity expected returns, potentially lowering them.
- Oak Hill Advisors expects the end of a credit cycle to hit public and private equity portfolios more severely than credit investments.
- Oak Hill Advisors notes that the current low rate environment and low unemployment create a dynamic where digital value creation may not match current workforce skills.
- Industry outlooks project that the private investment firm of the future will rely heavily on data and technical capabilities to make better, more automated decisions.
- Industry projections suggest the largest private equity firm of the future will require a combination of traditional investment skills and data science expertise.