Repackaging Private Equity—Why Retail Investors Are the Next Big Battleground
Private equity has always been a game for the big players, until now. Fund managers are racing to repackage private equity for smaller investors, while governments push for new structures like ELTIFs and LTAFs. But is this shift a revolution or a recipe for risk?
Henry Freeman, investment expert and founder of The Fund Society, has been at the heart of public and private markets for two decades. In this episode, he shares his unfiltered take on the push to retailise private equity, why commitment, not liquidity is the real secret to success, and how tech might be the missing link in solving PE’s accessibility problem.
Henry’s Journey: Henry Freeman has a diverse background in public and private investment markets, fintech entrepreneurship, and investment trust board membership. His career includes roles at Lloyds Private Bank, Foresight Partners, and Liberum, showcasing his extensive experience in managing and structuring investment funds.
Investment Strategies
Semi-Liquid Structures: Emphasis on creating investment vehicles like LTIFs and ELTs that offer some liquidity while maintaining the benefits of private equity.
Commitment Focus: The critical role of commitment in private equity, arguing that commitment is a feature rather than a bug, essential for achieving the high returns associated with private equity investments.
Public-Private Hybrids: Development of funds that invest in listed private equity firms, providing liquidity and accessibility while capturing private equity’s growth potential.
Risk Management: Approaches to managing liquidity risk, including the potential for forced asset sales during market downturns and the implications for fund performance.
Market Dynamics:
Historical Discounts: Analysis of historical opportunities in listed private equity during the 2008 financial crisis and recent market conditions, highlighting significant discounts to net asset value (NAV) and the impact on investor returns.
Current Opportunities: Examination of current market conditions post-COVID, with a focus on identifying value in listed private equity and the potential for significant returns as market conditions stabilize.
Challenges and Opportunities:
Scalability Issues: Discussion on the scalability of closed-end fund structures versus open-ended vehicles, emphasizing the challenges and potential solutions for scaling private equity investments.
Mis-Selling Risks: Concerns about the risks of mis-selling private equity products to retail investors, particularly with open-ended structures that may not align with the traditional private equity investment model.
Technological Integration: The potential for leveraging technology, such as tokenization, to streamline the transfer and management of private equity interests, enhancing liquidity and accessibility.
Fund Society:
Platform Overview: Introduction to the Fund Society, an online hub for investment professionals, providing curated intelligence-based content, news aggregation, and thought leadership.
AI Integration: Use of AI and large language models to curate and prioritize content, ensuring relevance based on market trends and news events.
Community Building: Efforts to build a community of investment professionals, facilitating knowledge sharing and networking opportunities across asset class
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Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
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