PE Activity to Shift but Channel Islands Still Have Global Role to Play in Post-COVID World
The Private Equity (PE) landscape is likely to change and distressed strategies are expected to see the greatest rise in transactions in the post-COVID world, according to an Intertrust report.
An overwhelming majority (92%) of private equity professionals surveyed by Intertrust expect to see a rise in the volume of distressed fund transaction activity over the next 12 months due to the impact of COVID-19. Yet almost half (46%) believe that mismatches in valuation expectations between buyers and sellers will restrict deal flow.
The Channel Islands are specialist centres for servicing PE and the islands’ financial services firms work with some of the world’s biggest PE managers.
Intertrust’s Managing Director in Guernsey, Marie McNeela, said that the islands’ experience in the funds space will ensure PE remains an active area for practitioners.
“There’s no doubt the landscape has changed and our results show that PE professionals are cognisant of that,” said Marie. “But the results also demonstrate confidence that capital will be invested and distressed strategies are likely to be a key area of focus for managers.
“Both Guernsey and Jersey have huge experience in end to end fund administration and that proven quality, coupled with continued growth of the Channel Island funds industry, is likely to result in a continued growth of our PE business. Combine this growth with Intertrust’s emphasis on technological solutions and you have an offering that meets exactly the criteria that our report tells us PE professionals are looking for.”
Intertrust, a global leader in providing tech-enabled fund and corporate solutions, interviewed 142 private equity professionals across Europe, North America and Asia to identify the risks and opportunities facing the industry in light of the COVID-19 pandemic.
The research was carried out against a backdrop of record levels of dry powder – Preqin reported at the start of the year that dry powder rose for a seventh consecutive year to c. $276 billion in 2019, triple what it was in 2012. It is therefore perhaps unsurprising that many respondents predict a rise in opportunities and potential deals. Four fifths (79%) say that lower valuations present a buying opportunity for active investors.
Jacob Smed, Managing Director of Intertrust in Jersey, said that being part of a global network will be a huge advantage as the world begins to emerge from the COVID-19 pandemic.
“At Intertrust our presence in more than 30 jurisdictions allows us to take a broad view and reflect on how the Channel Islands are best placed to engage in global activity,” Jacob said.
“Our funds teams here in the islands have been busy throughout the pandemic, including launching new funds, and are continuing to work with colleagues across the world to highlight the islands’ credentials and remain a trusted partner for private equity firms as we continue to help clients prepare for the ‘new world’ of private equity.”