2022 PE Landscape from Allocator Perspectives Panel

February 02, 2022

By Tom Murdoch

The private markets landscape has undergone a transformation over the last year, between the high valuations, potential market correction and more.

At last week’s iConnections Global Alts 2022 Conference held in Miami, Betty Salanic, CEO and founder of Accelerate Investors and host of the CIO Conversations podcast, interviewed Sharcus Steen, CAIA, the director of investments at the University System of Maryland Foundation on the topic. Irina Gershengoren a partner in our Financial Services Group, introduced the panel, titled “The 2022 PE Landscape from Allocator Perspectives.”

When asked about private markets, and the difference in the private markets from ’21 to ’22, Steen commented on the record number of fundraises and deployed capital in 2021, with 2022 potentially, if not already, seeing a slowdown.  He does however believe the activity will continue at or close to 2021 numbers, just not record breaking.  He also noted than when looking at private investment from an allocator perspective, the question typically asked is “Can we invest in PE?”  when the more important question investors should be asking is, “Do you have the liquidity to invest in PE?”

When discussing investment in private markets, the issue of high valuations is top of mind.  Steen emphasized the focus needs to be on the entry point to private investments, how to navigate the high valuations, and what the exit strategy is.  He also provided some advice to allocators for navigating the current markets and told them to avoid worrying about the herd mentality and focus on maintaining the balance and allocation of your portfolio.

Cultivating relationships with allocators was also discussed.  Steen noted that “allocators are a small circle,” which is important to convey to managers. He said some managers may believe that their strategy or timing of liquidation events are not a good fit for certain allocators, but that they should always take the meeting. In addition, allocators can be a great referral source for managers that make a favorable impression.

The chat concluded with the discussion around diversity, equity and inclusion (DEI), which has been a hot topic for the alternative investment industry.  “Within our organizations, we first all need to agree that whatever DEI problem we are trying to solve, is in fact a problem,” Steen said.  He added “We all need to agree that the solution to that problem can be addressed internally with a well-thought-out strategy.” 

Whether deciding when and how to invest in private markets, or how to navigate overvalued investments, or how to fix a DEI issue, the consensus was there is always room for improvement and networking and cultivating relationships is key. 

About Thomas Murdoch

Thomas Murdoch is a Senior Manager specializing in financial statement audits serving private equity clients, hedge funds and funds of funds.