Economic and political uncertainty in the US and the UK and concerns about growth and stability in emerging markets are the biggest challenges to investing this year, according to Coller Capital‘s founder and chief investment officer, Jeremy Coller.
The ramifications of Brexit negotiations and the Trump administration are “difficult to forecast”, Coller wrote in the firm’s Annual Report and Financial Statements for the year ended 31 March.
“Geopolitical uncertainty makes decision-making harder, but it also creates attractive investment opportunities for secondaries funds,” he wrote.
Despite the concerns, which include the slowing growth rate in China, turmoil in the Middle East and “real challenges” in several African and Latin American economies, broad-based improvements in the world’s economic fundamentals justify cautious optimism, Coller wrote.
The report was filed with Companies House on 7 August.
Amid heightened competition and dry powder – of which Coller estimates there is around $75 billion – the firm will focus on real assets such as real estate, infrastructure and natural resources, as well credit, as secondaries opportunities in these increasingly emerge.
“The secondaries market is evolving rapidly, and new opportunities will be created as private equity continues to advance in to new areas,” Coller wrote. The firm will continue to be an “active innovator” in these areas.
The veteran secondaries investor expects pricing to remain stable and volumes to remain healthy, barring significant economic shocks.
“All in all, this is a market that feels broadly in equilibrium,” he noted.
Coller Capital’s operating profit for the year ended 31 March jumped 17 percent from a year earlier to £3.4 million ($4.4 million; €3.8 million). Revenue rose to £74.9 million from £64 million.The firm is investing its $7.2 billion Coller International Partners VII vehicle, which held its final close in 2015, and has been active in GP-led processes, such as the stapled deal tender offer on Avista Capital Partners' first three funds, as sister title Secondaries Investor reported in June.