Private markets embrace wider swath of economy: Partners Group CEO

Private equity is regarded as an alternative asset class while shares of listed companies are known as traditional assets. This classification may not fit current market trends from the perspective of David Layton, CEO of Switzerland-headquartered PE firm Partners Group.    

Public markets have become more speculative over the past couple of years while private markets have become more of a traditional asset class, Layton said in an interview with The Korea Economic Daily on Monday.

He pointed out only 20% of the companies that went public in the US last year had positive earnings per share.

“Public market portfolios are beoming concentrated with fewer and fewer names. It is becoming focused more on technology stocks and less on industrial, consumer goods and healthcare. Much more broad swaths of the economy are owned in private markets today – we have seen more capital formation occurring in private markets than in public markets via IPOs,” the CEO said.    

While the private markets have been a domain for institutional investors, there is more “democratization” in the markets today, he added.

“There are smaller individual or institutional investors that have less access to the PE market. But we see some change – even defined contributions such as 401(ks) Plans are starting to explore opening up to PE investment in the US. It is a matter of fairness that we find solutions to provide opportunities for everyone,” he explained.

For high-net-worth retail investors, Partners Group is offering tailored private investment instruments called Evergreen programs that enable annual and quarterly investment and redemption. Evergreen programs provide more liquidity than limited partnerships do, which normally take more than a decade from the capital commitment to liquidation, the CEO said. Partners Group currently allocates 25% of its total assets to the Evergreen programs. 

The tailored private investment programs bet on private equities, secondaries, private debts and infrastructure assets for diversification. Due to the liquidity feature, the programs’ target return rate ranges from 8% to 12% versus a 20% return profile in the firm’s fully private portfolio. The firm provides catered investment solutions in South Korea via Samsung Securities Co., the CEO said.

Once it finds attractive sub-sectors, it invests in companies and executes add-on acquisitions while focusing on forming entrepreneurial governance of the portfolio companies – Partners Group’s entrepreneurial governance team proactively works with the firms to build dynamic board environments, and this differentiates the investment firm from other asset managers, the CEO said.

One of the successful portfolio firms is Portugal-headquartered specialty crop nutrition provider Rovensa, he said. Partners Group acquired the bio nutrition company in 2020 and has worked on enhancing crop yields and value creation. The asset manager is planning to acquire a crop nutrition competitor outside Europe, the CEO said.

Another successful case is France-headquartered Foncia, a leading property management services provider in Europe. After acquiring Foncia in 2016, Partners Group has transformed the property manager into a more institutionalized business, accelerated mergers and acquisitions and led Foncia's digital transformation. Foncia operates around 600 branches and manages a portfolio of 2.5 million individual residential units across Western Europe today.

Partners Group invests about 8% of its total investment deployment in Asia. The investment firm will increase exposure to the continent over the next decade, he said.

“We are focusing on Asian companies serving in the domestic markets less than investing in companies serving in the global market. Asia is very hard to ignore in this era – I wouldn't be surprised if you see more investment resources from our firm in markets like Korea over the next couple of years,” he added.

Founded in 1996, Partners Group manages $127 billion in assets and has invested $179 billion so far. The private markets-dedicated investment firms provide solutions to global institutional investors, sovereign wealth funds and family offices. It manages $4.5 billion committed from 35 Korean institutions, including National Pension Service (NPS) and Korea Investment Corporation (KIC).

Write to Chang Jae Yoo at yoocool@hankyung.com
Jihyun Kim edited this article.