SuperReturn International, a key conference for private equity investors around the world, is coming up at the end of February. Given the current climate of instability, both in geopolitical and investment terms, participants and speakers will have a lot to talk about.
One panel discussion specifically on this topic will take place on the second day of the conference. “State of the Union: ‘The New World Order’” will feature William E. Ford, CEO of General Atlantic, and Mike Arougheti, Director, Co-Founder, and President of Partner of Credit Group. The discussion will be moderated by Jason Kelly, New York Bureau Chief of Bloomberg L.P.
The discussion will focus on how volatility in the global geopolitical and economic environment will affect alternative investment strategies going forward.
Last year was the second year in a row that global venture capital deal value exceeded $100 billion, and it’s looking like venture capital investing in 2017 will surpass it, although forecasters are looking at fewer deals with higher capital value per deal. And with public asset management firms like Fidelity, T. Rowe Price, and Wellington injecting massive amounts into venture capital, the VC world could be poised for serious disruption.
In late 2016, CB Insights predicted that the election of Donald Trump to the U.S. presidency would spur investment in cybersecurity firms and that tech startups would continue to be well funded. However, there was uncertainty about what changes in or elimination of the Affordable Care Act would do to healthcare and biotech startups. They also stated that because the U.S. drives a significant share of VC and PE funding, “any major change in the relative weight of the U.S. in this picture would mean a significant shakeup.”
This, combined with an important election coming up in France and ongoing shifts in U.S. positions on taxation, immigration, and trade, will most likely shake up a great deal of private equity spenders. If National Front leader Marine Le Pen wins the French election, she has talked about nationalizing banks and called for the collapse of the EU, saying that quitting the Euro is the only option for revitalizing France’s stagnant economy. If a National Front victory does take place in France, European markets will most likely experience dramatic changes.
But there’s a bright spot on the horizon in the form of India. With a well-regulated industry, some investment firms are seeing big opportunities in India, as it has been an island of stability in a world otherwise replete with chaos.
Surprisingly, some investors are also seeing China as a particularly attractive private equity market, despite concerns about its credit, real estate, and technology sectors, as well as speculation about possible U.S.-imposed tariffs on Chinese goods.
“The most important reason is that China isn’t fragmented by rules and regulations as are all the other emerging markets of significant size,” said Derek Sulger, Partner and Founder of Lunar Capital, in the December 2016 Triago Quarterly. “In China you can build bigger businesses faster and more easily. The second most important reason…is the bright outlook for long-term Chinese growth and domestic consumption. In fact, today there is no major market—apart from India—advancing as rapidly as China.”
Ford, Arougheti, and Kelly will certainly have a lot to discuss in their talk. We look forward to hearing more about their predictions for the coming year in private equity investments and how they line up with the prognostications of other movers and shakers in the field.