An expert interview with Imogen Richards, Partner at Pantheon

With SuperInvestor coming up next month, we spoke Imogen Richards, Partner at Panethon. Read on to get her expert insight into current investment strategies, the denominator effect, overlooked industries and mitigating risks in this volatile landscape.

1. “Even as the denominator effect fades, LPs are still tapped out”. Do you agree with the above? If so, why?

Not all LPs are cut from the same cloth and there are different dynamics that investors are facing so it’s hard to generalise. Some LPs have to fundraise and are therefore suffering from the more challenging fundraising environment, and others may have to manage broader portfolios where the denominator effect has had an impact and has reduced the capital that they can invest in private assets. The reduced distributions that have been received from the shrunken exit environment over the past year has also fed into the lack of capital, and a resurgence of exits should help to loosen up the system and free up more available capital.

2. Are there any specific strategies and regions you're investing in or where you're seeing particular growth?

We are a global investor so invest across all geographies and we favour investing in the lower to mid-sized area of the market. We think that venture, growth and small to medium sized buyout investments offer the best potential for growth as they generally have the most potential for value add transformation, can benefit from add on acquisitions, are lower levered and are often better priced than their larger counterparts.

3. Certain sectors, such as generative AI and sustainable energy, have increased in popularity. Are there other investment opportunities that are being overlooked?

There is certainly a lot of excitement over the potential for generative AI; and sustainable energy is something that the world will need to increasingly turn to as a resolution for our climate change issues. There are however other areas that we’re also interested in, for example on the technology side the advances in big data and the increasing importance of digital security are trends that we see having significant growth potential. The evolution of consumer preferences such as increased mobile usage, e-commerce, and more sustainable consumer preferences are also interesting areas to consider, and healthcare is another area where we see potential for investment. The global ageing population and increasing coverage in emerging economies is leading to increases in healthcare spending and there are exciting crossovers between healthcare and technology such as the accelerated use of telemedicine.

4. With threats diversifying, such as cyber attacks, economic downturns, environmental events, war, global pandemics, or the emergence of a disruptive new competitor, what steps can managers take to build resilience?

Risk management is an obvious place to start, so ensuring that you have the basics like appropriate cyber security in place, but also that you aren’t taking outsized bets in any companies, sectors or geographies. It’s important to have in place appropriate procedures, and independent oversight functions like risk, fund treasury and portfolio construction. ESG is also increasing area of reputational risks for organisations, that can have meaningful implications for financial returns if it isn’t managed appropriately, so it’s an area that managers are increasingly focussing on to manage their risks.

Want to get more insights from Imogen Richards? Secure your spot at SuperInvestor and join her session!