Side Letter: Europe’s €2.1trn Amundi plots new team; Women in Private Markets; PE with a purpose

Europe's largest asset manager wants to build a new team to access alts. Plus: A call to influential women shaping private markets, and how to emerge ahead in PE's race for talent. Here's today's brief, for our valued subscribers only.

Just happened

Amundi’s plans
Europe’s largest asset manager is rethinking the way it wants to access private equity, Side Letter has learned. Paris-headquartered Amundi, which has €2.1 trillion in AUM, is in the early stages of building an in-house secondaries unit, according to two sources familiar with the institution. It’s unclear whether the team would focus solely on private equity or other alternative asset classes, and a spokesperson for Amundi did not return requests for comment.

Getting in on the secondaries market is a no-brainer for many asset managers – buying portfolios of secondhand LP stakes can be a great way to build AUM and increase relationships with GPs. Amundi is likely to face an uphill battle, with a limited talent pool to fish from and compensation probably posing a challenge, market sources tell Side Letter. But it if succeeds, it will get in on a growing part of the alternatives market that surpassed $100 billion for the first time last year.

Calling all readers!
Nominations are now open for PEI Media’s 2022 Women of Influence in Private Markets list. Our annual index recognises and celebrates the achievements of pioneering across private equity, venture capital, private debt, infrastructure and real estate. Our editorial teams will decide the list based upon:

  • The nominee’s achievements over the last 12 months (since 1 March 2021) in their careers, their firm or the private funds industry
  • Evidence of innovation or game-changing actions (eg, closing an innovative deal, securing an LP commitment or launching DE&I initiatives)
  • Evidence of leadership, impact or influence on others within the industry and beyond

The deadline for nominations is Wednesday 30 March. Let us know who you think deserves recognition here.

PE with a purpose
Private equity investors, and by extension, their portfolio businesses, are feeling the effects of an exodus from corporate America referred to by some as ‘the great resignation’. “Covid was a dramatic wake-up call,” said one panellist at PEI‘s Responsible Investment Forum on Wednesday, speaking under Chatham House rules.

The key issue, according to the panellist, is that employees no longer feel an alignment of purpose, both for themselves within the company, and for the company in the wider world. The task then, for PE firms hoping to compete in the global race for talent, will be creating that purpose. “Whoever secures the top decile [of employees],” the panellist said, “will win the next decade and probably the next century”.

Another measure firms can take against this talent shortage is instituting a robust diversity, equity and inclusion programme, or leveraging organisations whose sole purpose is to increase the pipeline of candidates for such roles. As talented professionals prove more difficult to find, firms would do well to search proactively in places they may not have thought to look before.

Essentials

Not so grim up north
Canada’s Caisse de dépôt et placement du Québec and Ontario Municipal Employees Retirement System both reaped the rewards of their penchant for direct investing last year, affiliate title Buyouts reports (registration required). CDPQ posted a 39.2 percent one-year net return for PE, beating its 32.1 percent benchmark return, which it attributed to “good positioning” in growth sectors that drove dealmaking, including consumer, financial services, healthcare and technology. CDPQ has in recent years reweighted its PE portfolio to direct investing to achieve stronger returns; at present, more than three-quarters of assets are co-sponsorships and co-investments.

OMERS, for its part, earned 25.8 percent against an 8 percent benchmark from PE last year. Overall PE portfolio assets increased to almost C$20 billion ($15.8 billion; €14.3 billion) as of end-December, up 34 percent year-on-year. The asset class now makes up 16 percent of total OMERS assets.

Your two cents
Are you a senior PE or private debt executive? If so, affiliate titles Private Funds CFO and Private Debt Investor would like to hear from you. The two titles have compiled a survey and will turn the results into a definitive guide to how the world’s private fund leaders are thinking ahead of a pivotal year. From strategic decisions (what’s the outlook for fundraising post-covid?) to ESG issues (how are environmental concerns changing the operating environment?) and outsourcing (what functions do LPs want managers to outsource?), the leadership team of the modern PE firm is grappling with some thorny issues. The survey takes 10 minutes to complete and your submission is entirely confidential. You can find it here.

Sizing the individual investor opportunity
report from iCapital and Boston Consulting Group sheds more light on the scale of opportunity to be found in the private wealth and individual investor channels. Here are some highlights:

  • PE commitments from individual investors are expected to grow significantly across all markets but particularly in Asia-Pacific, which is set to account for 37 percent of commitments by 2025, compared with 27 percent in 2020
  • Individual investors in North America are predicted to make up more than half of commitments by that time, and European investors just 9 percent
  • PE AUM among individual investors is set to grow 2.4x by 2025
  • The ultra- and high-net-worth segment (those with more than $20 million) will add $300 billion to the global PE market over five years
  • Individuals will on average account for 10.6 percent of every PE fund raised by 2025, up from 8 percent in 2015.

Today’s letter was prepared by Alex Lynn with Adam LeCarmela Mendoza and Michael Baruch