Private equity remains a strong investment opportunity, but the industry is evolving significantly, according to Apollo's Leon Black and Blackstone's Steve Schwarzman.
The billionaire investors offered up their views alongside other private equity titans including Jim Coulter, CEO and founding partner of TPG; Robert Smith, founder, chairman and CEO of Vista Equity Partners, and Jonathan Nelson, founder and CEO of Providence Equity Partners, at the Milken Institute Global Conference in Los Angeles.
Black and Schwarzman noted that private equity is maturing into more of a broad based alternative asset management business with more diverse financial products and mandates. “We've seen growth in separate managed accounts, as the industry becomes more institutional,” Black said. “We've also seen fee compression come along with that.”
Despite the evolution in the industry, and resulting fee compression, the panelists were generally optimistic about finding pockets of opportunity to deploy capital.
Black cited the energy industry and European financial institutions as two areas ripe for private capital as traditional credit avenues have dried up.
Schwarzman also cited energy financing companies, and real estate as “good places to be,” but also said that prices are still very high. “We're like basketball teams without the 24 second clock. We don't have to shoot.”
Coulter, Nelson and Smith added a few more ideas to diversify the mix, touting healthcare, software, and premium content as interesting sectors.
“We are very focused on software at Vista,” Smith said. “Cybersecurity is a big issue that people aren't talking about enough.” He also cited 3-D printing technology as an opportunity that will be a “massive disruption.”