We, at Boustead, see a trend of big investors and company buyers, including pension funds, family offices and wealthy individuals, choosing to make direct investments in companies and projects rather than invest through intermediaries like hedge funds and private equity groups.
Boustead’s professionals talk with investors and acquirers daily which gives us a good sense of this trend.
In fact, we posted an article in early 2016 describing that in response to this trend and in order to get the best deal for our clients, we regularly reach out to a broader universe of potential investors and buyers including those pension funds, family offices and wealthy individuals.
It caught my attention, therefore, when Axial, the huge online deal source database, reported that it too has seen the direct investment trend and described several driving forces which are likely to continue the trend (click here).
Axial’s three driving forces are:
- Greater private company information availability which diminishes the value of deal intermediaries’ famed proprietary deal networks.
- Greater capital source information availability due to online resources such as Axial.
- Reported “fee fatique” which may simply be a reaction to lower returns generated by hedge funds and private equity funds. I wonder, if returns were strong, would there be fee fatigue?
Neither Boustead nor Axial is forecasting the end of hedge funds and private equity groups. Rather, the trend signals that there are more funding and sale options available. For companies looking for capital or for a buyer, and for their investment bankers, that’s good news.
Please contact me to discuss any capital market project whether raising capital, equity or debt, or M&A. Thank you.