The new COVID-normal in private capital markets is setting in and has been generally defined by prudence and caution for investors. However, for long-term investors the Warren Buffett adage “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes” holds true as institutional investors have begun to look through the short-term volatility to take advantage of mis-pricing or investor caution across some sectors in both listed and private markets.
Locally, based on discussions with clients and other industry participants, private equity has been (and will likely continue to be) very active, deploying funds raised pre-COVID to take advantage of the opportunities in the current market across a range of sectors both private and public. Demand for private credit also continues to increase in Australia as this is a relative new asset class. Due to the relative risk-adjusted returns compared to other private markets we see this trend continuing.
Globally, some industries are still in recovery mode and being deemed too risky for material private deal activity, but those that were not materially impacted or were positively impacted by the pandemic have been the main focus of the recent deal activity.
Our US-based colleagues have prepared a good article and summary from their perspective on these markets in the US here.
