More than 850 people attended this year’s edition of LPEA Insights, up from 650 in 2023 and 350 in 2022, LPEA CEO said during the conference.
LPEA chair added in his introductory remarks that people are starting to talk about “the next private equity super cycle,” referencing an article in the magazine Institutional Investor. “It is suggested that the returns of private equity will once again--perhaps--beat public equity. Public equity has done rather well this year. It has done so well that it might even have gotten ahead of itself. Private equity is now currently--they assert--valued at some two and a half terms--since there’s a multiple--lower than public equity. So at least by relative measure, private equity--one could argue--is a buy.”
Another argument, continued Mansfeldt, is that we may see distributions again. “The pendulum swung almost to a screeching halt,” but it may be swinging back a bit. And once you get more more distributions and exits, that feeds into returns and investor confidence.
Citing a survey conducted by Preqin, Mansfeldt said that “belief that private equity will do better” in the near future has nearly doubled. In the data firm’s H2 2024 Outlook report, 45% of institutional investors thought that private equity would perform better over the next 12 months (from June 2024), up 19 percentage points compared to the 26% who held the same belief in June 2023.
And, with interest rates coming back down--the European Central Bank on 17 October 2024 --that could help as well. “It lifts all boats,” said Mansfeldt. “But this conference is about what you can actually address yourself.” Industry players don’t have the power to change interest rates, but they can work on improving their operations. “Operational excellence. If you manage this, you can lift your own boat. And lifting your boat is how you might stand out from the crowd.”
“They say two things in life are certain: death and taxes. I would suggest--at least here in Luxembourg--there’s a third element to that. Regulation,” he concluded. “So in the end, one needs to be efficient, competitive and compliant to stand out and be operationally excellent.”