Co-investment activity levels have continued to pick up pace, such that we have an excess of high-quality opportunities, spanning a diverse range of sectors, to select from for our clients, says Peter Knight.
As a result, we’ve recently expanded the team with new hire, Caitlin Cameron, who joins as Investment Associate from Gresham House to build our capacity.
Growth in the co-investment market is being driven by a combination of factors. This includes the increasing prevalence of independent sponsors, liquidity innovations such as single asset continuation vehicles going mainstream, and the rise of take-private deals where long-term investors seek to capitalise on suppressed valuations in public markets.
Indeed, data from S&P Global Market Intelligence show that the value of UK public-to-private transactions reached almost £16 billion in the year to the end of August - more than the total value of such transactions in the previous two years put together1. As the opportunity set within the co-investment space expands, our place in the market continues to grow.
Investors are becoming more confident about transacting, thanks to a widespread consensus that interest rates have peaked and will now start to fall steadily: the only question on investors’ minds being how far and how fast? One sector where a marked improvement in sentiment is becoming evident is in the commercial real estate space, where the prospect of interest rates being at more supportive levels is triggering an uptick in transaction volumes. Now that investors’ concerns about further yield expansion have been allayed, they are starting to re-engage with the market.
As well as a healthy pipeline of prospects to appraise, we have several deals that are nearly ready to complete or have already completed. These include an investment in a UK-based premium food brand, a major take-private deal of a leading software company, which is being led by KKR, and a unique commercial property opportunity in Chiswick, London.
One of the major benefits of co-investing is that we often come on board after the initial investment has been made and sponsors are selling down stakes in a business. This means we get a chance to assess the company’s current performance against price and access the investment on attractive terms.
With plenty going on, and a good choice of opportunities for our clients to consider, we’re anticipating a strong finish to 2024.
1: UK take-privates surge; US startup investment follows remote workers