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Magazine Issues » July-August 2020

Specialist fund administrators directory 2020: Covid-19, private equity and liquidity

 

MARIE FITZPATRICK, SENIOR DIRECTOR, JTC

How would you describe the impact of Covid-19 on private market investments and what is the outlook for the sector?
At JTC, our European investment fund clients have been impacted by the pandemic; in response, our clients have changed the way they operate their funds, introducing electronic signatures, virtual board meeting and a slowdown in M&A activity.

The impact to private markets investment exposure and its outlook will be dependent on the types of investments they hold within their portfolios. There are some fund managers whose performance will not be impacted but enhanced, such as real estate managers with logistic holding and data centres. Whilst other real estate managers who have invested heavily into office space may be affected, fund managers who have infrastructure investments are likely to continue to perform well.  Private equity managers who are generalist may have one or two portfolio companies who are struggling with liquidity during this time, but when things return to normal will continue to perform well. However, this will be very much depend on asset class.

How is the use of liquidity management tools in private market investment funds evolving?
Since the start of the pandemic, fund managers realised that one primary concern was to identify whether their investment portfolios were vulnerable and may face liquidity issues in the short or medium term. JTC has seen a variety of liquidity management tools being considered and deployed across the private investment funds market. Managers whose funds were fully deployed have looked to recall capital distributed within the last 12 months, others have simply requested to renegotiate terms and provisions in their Limited Partnership Agreement to enable them to recycle capital if the situation arises.

Fund managers with a more pressing need for liquidity have explored credit lines, NAV [net asset value] facilities or [preferential] equity as a tool to manage liquidity of their portfolio investments. In addition to these options, some fund managers are in conversations with those who specialise in debt, looking at co-investment optionality.

JTC
JTC House, 28 Esplanade City
St Helier JE4 8PB
Jersey
www.jtcgroup.com 
[email protected]
+44 1534 700 000 

Country of origin: Jersey
When founded: 1987
Number of employees: 900
Name of parent company: JTC Plc
Total assets under administration: $80 billion
Total assets under administration in Europe: $75 billion
Senior executives: Jonathan Jennings (London), group head of institutional client services; Joost Mees (Luxembourg), managing director; Marie Fitzpatrick (London), senior director


KEITH MCSHEA, HEAD OF LUXEMBOURG, LANGHAM HALL

How would you describe the impact of Covid-19 on private market investments and what is the outlook for the sector?
Due to the nature of the private investment funds market for illiquid assets, the investments (long-terms holds) and structures (closed-end or limited redemption rights), it has been resilient to the short-term effects of Covid-19. Fund closings and transactions have slowed, but some have continued to happen and as we approach July 2020, we are seeing transactions in certain sectors (venture tech, secondaries, logistics, residential real estate) pick up. 

The long-term effects of Covid-19 to the private investment funds market for illiquid assets is difficult to assess at this stage. I am unable to comment on the market for funds with liquid strategies.

How is the use of liquidity management tools in private market investment funds evolving?
For open-ended funds with illiquid strategies, the general partner is typically using its discretion to ‘gate’ redemption requests, with a view to treating existing and ongoing investors equitably.

Langham Hall
42-44 avenue de la Gare
L-1610
Luxembourg
www.langhamhall.com
[email protected]
+352 2775 1521

Country of origin: UK
When founded: 2006
Number of employees: 460
Name of parent company: Langham Hall Holdings
Total assets under administration: $100 billion
Total assets under administration in Europe: $66 billion
Senior executives: Rob Short (London), managing partner; Keith McShea (Luxembourg), head of Luxembourg; Joe Hime (London), head of UK


NATASHA HEAD, MANAGER – BUSINESS DEVELOPMENT, MAITLAND

How would you describe the impact of Covid-19 on private market investments and what is the outlook for the sector?
Covid-19 has caused a shock to the private markets sector; the number of deals has declined and fundraising has taken a hit. Despite this, the general feeling is positive. Covid-19 will create opportunities for the private markets sector with undervalued and distressed assets, and investors have not lost faith in the system, so they are prepared to invest when opportunities arise. Recovery will take time and investors are inclined to become more risk-averse which may slow the recovery for asset classes which rely on greater risk appetite. 

KAVITHA RAMACHANDRAN, HEAD OF BUSINESS DEVELOPMENT AND CLIENT MANAGEMENT, CONTINENTAL EUROPE

How is the use of liquidity management tools in private market investment funds evolving?
We have traditionally seen redemption fees, redemption gates and the suspension of redemptions being used as liquidity management tools. In general, we have seen that there is greater acceptance that the redemption periods are longer for funds investing in illiquid assets.

Maitland
LABS House, 15-19 Bloomsbury Way
London WC1A 2TH
United Kingdom
www.maitlandgroup.com
[email protected]
+44 (20) 3077 1234

Country of origin: Luxembourg
When founded: 1976
Number of employees: 1,100
Total assets under administration: $167 billion
Total assets under administration in Europe: $60 billion

Senior executives: Kavitha Ramachandran (Luxembourg), senior manager, business development and client management; Natasha Head (London), manager – business development


US BANK GLOBAL FUND SERVICE

US Bank Global Fund Service
24/26 City Quay
Dublin D02 NY19
Ireland
www.usbank.com/investment-services/global-fund-services.html
invest[email protected]
+353 1523 8000

Country of origin: USA
When founded: 2007
Number of employees: 140
Total assets under administration: $1,010 billion
Total assets under administration in Europe: $31 billion

Senior executives: Linda Gorman (Dublin), CEO; Ken Somerville (Dublin), COO

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