“Looking at private markets in 2023, we think we will see institutional investors increasing their investments in this space, even given the current environment of rising inflation,” said Giuliano Bidoli, director, tax, BC Partners and Luxembourg Private Equity and Venture Capital Association (LPEA) executive committee member. The main motivation will be the ongoing desire for diversification of investment in the search for returns in a variety of sectors and asset classes.
Regarding managing this growth, he believes that “ensuring cost control is a particular challenge for next year and beyond”. Relying exclusively on manual processes is not an option, not least because more effort is required to analyse performance, costs and energy use in portfolio companies. “It will require an upgrade in digital technology, which will speed the collection and processing of the data needed to inform decision making,” Bidoli said.
The government could help. “A change that many are calling for in the industry is a reduction in the minimum investable amount required by individuals to access alternative funds. Other countries have done this.”