Presentation Global private markets Ross Hayter Investment Director, Private Markets Product Strategy & Solutions Aberdeen Standard Investments
July 2018 Global Private Markets Ross Hayter Investment Director (Private Markets) This communication is intended for investment professionals only and must not be relied on by anyone else. Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.
Private ˈprʌɪvət / Market ˈmɑːkɪt/ Adjective / Noun Investments not traded on a public exchange or market 9
Slides relate to Standard Life Investments Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments
The systems and services that cities or countries use in order to operate effectively Slides relate to Standard Life Investments Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments
Development of assets that comprise of land and buildings Slides relate to Standard Life Investments Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments
Private Credit is debt provided directly to businesses or projects and the debt is not traded on an exchange. Slides relate to Standard Life Investments Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments
Investment into businesses and ventures that are not traded on the stock exchange Slides relate to Standard Life Investments Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments
The rise of private markets
US Capital Raising in 2017 $2.1 trillion $2.4 trillion 2007-2017 Public stock and bond markets 1990-2007 Private equity and debt market -0.2 +0.5 Source: Dealogic; Wall Street Journal analysis of SEC filings; Token Report 16
US Capital Raising in 2017 $2.1 trillion Public stock and bond markets $2.4 trillion 1990-2007 Private equity and debt market 2007-2017 -0.2 +0.5 Source: Dealogic; Wall Street Journal analysis of SEC filings; Token Report 17
US Capital Raising in 2017 $782 billion Debt sales to big investors Sold to qualified institutional buyers investors with typically at least $100 million in assets under management. $1.65 trillion Private placements Equity and debt offerings, sold 1990-2007 mostly to relatively 2007-2017 well-off accredited investors -0.2 +0.5 $6.5 billion Initial coin offering Sales of cryptocurrencies and tokens to raise money for products and services $35 million Securities crowdfunding Up to about $1 million a year per issuer, sold mainly to smaller investors. Source: Dealogic; Wall Street Journal analysis of SEC filings; Token Report 18
Increasing activity in Europe Source: Unquote Barometer, 31 December 2017 19
But Getting it wrong can be costly There are ways to mitigate this risk 6 IRR vs TVPI (Global 2000-2016) Manager, 5 sector and geographic selection is important 4 Fundamental research and portfolio construction is key 3 Secondary market can also generate outperformance 2 1 0-50 -40-30 -20-10 0 10 20 30 40 50 2000 (106) 2001 (68) 2002 (53) 2003 (55) 2004 (103) 2005 (142) 2006 (190) 2007 (214) 2008 (184) 2009 (65) 2010 (97) 2011 (119) 2012 (128) Source : Aberdeen Standard Investments 20
Private Markets Innovation
A brief history lesson Public capital makes a decision Private capital makes a decision 1950 Transaction Platform 22
A brief history lesson Public capital makes a decision Private capital makes a decision 2018 Transaction Platform 23
A brief history lesson Public capital makes a decision Private capital makes a decision 2018 Transaction Platform 24
Three predictions for use of technology in private markets 25
Three predictions for use of technology in private markets Asset value bridge, breaking down key performance drivers Portfolio cash flow by investment per asset class 1. Portfolio analytics will identify drivers of value and create private markets risk transparency 2. Use of artificial intelligence and machine learning to find value in direct investing 3. Blockchain will disrupt ways of accessing private markets Source: Aberdeen Standard Investments Portfolio migration over time 26
Conclusion
Private enterprise is all around us Slides relate to Standard Life Investments Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments
Pace of innovation is gathering and the future seems closer than ever From 1958 to 1963, a Sunday comic strip predicted the future. Arthur Radebaugh's Closer Than We Think represents midcentury futurism at its most optimistic! Source: Gizmodo 2017 - Daimler Benz Concept car 29
30 Thank you
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Presentation Global private markets Ross Hayter Investment Director, Private Markets Product Strategy & Solutions Aberdeen Standard Investments