Side Letter: Actis pivots from PE to hard assets; GP-leds hiring spree; sharia-compliant PE

Actis has shifted its financial services team amid a wider move towards hard assets. Plus: the search for secondaries talent is heating up thanks to GP-leds and Partners Group explains how PE can become sharia-compliant. Here's today's brief, for our valued subscribers only.

They said it

“Care homes have tended to be good PE investments, but it does come with potential reputational risk.” 

A potential buyer in ICG’s sale of European care home operator DomusVi tells sister title Secondaries Investor that the pandemic has led to greater scrutiny on private ownership of healthcare assets (registration or subscription required).

Just happened

A hard (assets) decision
Emerging markets giant Actis made the unusual announcement yesterday that its financial services team had jumped ship to Apis Partners. In a statement, Apis said Cairo-based partner Hossam Abou Moussa and two investment professionals would join the firm while continuing to advise on financial services assets in Actis’s existing portfolio. It comes as Actis pivots away from PE towards hard assets, a decision Bloomberg reported in October. Here’s what we know:

  • The Apis move is an advisory arrangement rather than a spin-out, meaning Actis retains all responsibility for the FS assets;
  • Actis is understood to have no plans to replicate this transfer with its remaining PE portfolio and team, which will continue to deploy and manage existing capital;
  • The firm is expected to close Actis Energy V above its $4 billion target next quarter.

Sharia-compliant PE
PE – an asset class synonymous with the use of leverage – is not an obvious investment destination for sharia-compliant investors. Nevertheless, Employees Provident Fund of Malaysia selected Partners Group last month to manage one of three sharia-compliant separately managed accounts. In a Q&A, PEI caught up with PG’s Asia chairman Kevin Lu to discuss the complex ways sharia values can be incorporated into the PE model without sacrificing returns. Key takeaway? The biggest hazard associated with sharia-compliant PE is concentration risk. Keep an eye out for the interview later today.

GP-leds hiring spree
PE may still be a financial sector that’s notoriously difficult to get a job in, but there’s one area of the industry where demand is far outweighing supply. The GP-led secondaries market is suffering from an enviable problem: there aren’t enough people to address the volume of dealflow coming through the doors – particularly in the pandemic-spurred hot market – as we explore in our Special Report this week. With new entrants including TPGBrookfield Asset Management poaching talent wherever they can, experienced secondaries professionals are finding out they’re the hottest tickets in town. “We are caught in that little sweet spot,” says one buyside principal.

Essentials

Cambridge courts rich Asians
Investor advisory firm Cambridge Associates has opened an office in Hong Kong to expand its HNWI and family office client base in Asia. Edwina Ho, formerly of Willis Towers Watson, will lead the office and Mary Pang, head of the firm’s global private client practice, has relocated to Singapore from San Francisco to bolster its regional presence, per a statement. Wealthy Asians represent a vast and comparatively untapped pool of capital for alternatives managers, as PEI reported in January.

SEC on ESG
The US Securities and Exchange Commission is wading in on ESG. Some 22 SEC staffers are forming a climate and ESG task force within the Division of Enforcement, reports sister title Regulatory Compliance Watch (registration or subscription required). They’ll look at “ESG-related misconduct”, including issuer “misstatements” in disclosures, as well as compliance issues relating to investment advisors’ and funds’ ESG strategies.


Today’s letter was prepared by Alex Lynn with Adam LeRod James and Carmela Mendoza.

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