Aberdeen Standard Investments in profile; how leverage is powering up secondaries; and more… Here is your weekly round-up of essential industry news and analysis.
This week, Unquote spoke to Aberdeen Standard Investments' global head of private equity, Graham McDonald, as part of its In Profile series. Almost 12 months ago, regulatory approval was given for Aberdeen Asset Management to merge with insurance firm Standard Life (SL) to become the UK's largest asset manager, with significant exposure to private equity. "Aberdeen had a global footprint whereas SL was a European franchise," McDonald said. "With the nature of the industry, the respective teams actually knew each other very well. Philosophically speaking, they had a lot in common and consequently bringing them together has been relatively straightforward." In terms of equity exposure, Aberdeen currently has £13bn in assets under management across 102 vehicles, with the majority being in private equity and around 10-15% in venture capital. Read more
The use of leverage in secondaries has soared, as funds are continually seeking new ways to boost spending power. "Leverage has increased steadily over the past few years," says Mathieu Drean, global head of secondaries at fund advisory firm Triago. "It is being driven by a classic combination of increasing demand and expanding supply." With more players chasing a finite number of transactions, competition is fierce. Prices are rising, so buyers are using leverage to boost their spending power and also get the requisite returns for their own investors. What is more, there are many more banks and specialist funds actively promoting leverage today than there were five years ago. "The use of leverage in secondary deals – a minority practice a few years ago – is now a majority practice. Not to use any leverage places buyers at a disadvantage today," says Drean. Read more
The first three months of 2018 saw just seven buyout deals in central and eastern Europe, according to Unquote Data. This marked a significant drop compared with the corresponding period in 2017 when 17 deals were recorded with a total EV of €1.6bn, the most active start to a year since before the financial crash and the highest aggregate value since Q1 2013. By comparison, 2018 has witnessed somewhat of a slow start, with deal value amounting to €610m. However, the region has been on a positive trajectory for deal activity in recent years. Its economies are performing well and the region remains largely competitive in terms of wage costs, making it an attractive destination for foreign direct investment. "Strong macroeconomic growth of 3-10% on the domestic markets and foreign expansion are helping CEE companies substantially improve their profits and margins," says Enterprise Investor's president Jacek Siwicki. Read more
That's all for this week's round-up – don't forget to check unquote.com for more in-depth news and analysis.
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Features editor, Unquote
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