How are LPs' views on asset class evolving? Is co-investment the next big thing for LPs? Jim Strang, Managing Director and Head of Europe at Hamilton Lane, spoke to us about the shifting dynamics of the private equity industry, and the trends to look out for.
What are the key structural changes taking place that are affecting LPs' view of the asset class?
Probably, the biggest structural change we’re seeing is that the industry is much broader than it's been in the past. The entire definition of the industry has changed to encompass new strategies, such as private debt. Rather than just private equity, the whole notion of private markets is becoming more relevant. This gives LPs a much wider range of alternatives to think about compared to what they have had in the past.
How is the advice you are providing to clients changing in response?
As LPs have a much broader pool of opportunities to pick from, we're focusing more on how we balance the risks and returns that these different strategies deliver and how we integrate them into the portfolios to meet a growing set of client needs.
How do you see the role of GPs changing in the next 3-5 years?
The current structure is likely to remain the same for the next 3-5 years at least – I don’t see it changing materially. In the longer term it might, but at the moment there's no sign of that.
There is growing interest from LPs in co-investments, what effect is this having on the industry?
Everybody's asking for co-investment opportunities. It’s a dynamic that’s been around for a few years now, so there are more investors asking for more of it. Interestingly, the number of co-investments being executed is still a relatively low proportion of what is being asked for, but it's a well-established trend that is set to continue.
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