In the midst of the pandemic, Swancap, a private equity firm, was seeking €250m for its Swan IV co-investment fund, but “we ended up raising €300m, 20% above our target,” recounts Mansfeldt. And while valuations in their portfolios took a hit in the depths of the crisis, they bounced back mid-year and regained all the lost ground.
Private equity “displays lower volatility than public markets,” he argues. “So it won’t surprise us if private equity continues to do reasonably well” in 2021. “We’ve seen it before, through previous crises, PE has held up.”
Mansfeldt says PE outperforms by “maybe 500 to 600 basis points over public markets.” That said, he views PE more “as a complement than a complete alternative. It’s a stabiliser in the portfolio.”
Another bright spot: Brexit “has already for years” helped Luxembourg grow as a PE centre. Brexit has “been one of the many factors that have led PE firms to look to Luxembourg for their fund domiciliation and fund management operations. And I’d guess this will play out more, more as a fact than as a precaution” as the transition period ends on 31 December.