NEW YORK, April 20, 2020 /PRNewswire/ -- According to the latest analysis from the CEPRES Investment Platform, 2021 could be the best year for private markets ever because of the fallout from the COVID-19 crisis. The analysis looked back at the impact on private equity and credit transactions before, during and after the most recent Global Financial Crisis (GFC), to interpolate possible outcomes of the current COVID-19 pandemic.
By looking at cash flows of 7,800 funds, 80,500 deals and underlying operating metrics of $28 trillion worth of PE-backed companies, the CEPRES Platform is able to uncover patterns of returns, risks and deal pricing across different geographies and segments spanning the GFC period. These findings can help inform on some likely patterns for the current crisis. From this analysis, some key findings were:
- Pre-GFC Industrials and Consumer dominated PE Deals by investment volume, but lost traction post-GFC compared to Technology and Healthcare
- North America was better able to weather the GFC storm and recovered faster
- Fund vintages 3 years prior and deals invested 2 years prior to the GFC were negatively impacted and investors should expect similar
- Some investors returned to market too early during 2008 and suffered from second contraction
- Investors able to act in mid-2009 were able to take advantage of bottom pricing and make outsize returns
The full report is available to CEPRES users from: https://www.cepres.com/latest-intelligence
"The Coronavirus is a black swan event that is exacerbating already existing systematic risks in private market portfolios. It is by no means the same as the GFC and we see different idiosyncratic outcomes, but some similar trends. Private equity is perfectly placed to take advantage of a downturn. For those investors able to act on the dry powder in the market, we expect a top buying opportunity for well-priced companies next year. Following a largely benign environment over the last decade this event will cause a shift in allocation strategies as investors seek higher growth sectors to invest in. Using the CEPRES Platform we observe an over-diversification has led some portfolios to be worse affected than necessary. Those who focused on higher growth, innovative segments will be less impacted and investors able to act and deploy capital with the right strategy could quickly recover any losses from the current fallout. As Warren Buffet said 'be fearful when others are greedy and be greedy when others are fearful!'"
Christopher Godfrey, President CEPRES Corp.
CEPRES is the leading provider of investment analytics & data solutions for private capital markets. CEPRES began in 2001 as the Center of Private Equity Research and was the first to 'look-through' private market funds to underlying deal and asset performance.
Through CEPRES, decision makers can secure their investment data to gain true insights on their portfolio of funds down to single operating assets within a confidential yet fully flexible framework.
To date over 2,750 GPs & LPs have securely exchanged and modelled investment data of over 7,800 funds and 80,700 deals worth over $28,4 Tr. in Enterprise Value.
For further information visit www.cepres.com.
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