Time to highlight operational prowess

These are uncertain times for investors. Which means there’s heavy lifting to be done by firms’ in-house communications and investor relations teams.

Extreme volatility in currency and equity markets following the Brexit referendum result – and longer-term concerns over the resulting UK and European regulatory, fundraising, financing and investment landscape – has had many an IR department rushing to issue client memos with their take on the unfolding political and economic situation.

In fact, one US-based investor in private debt funds told us he’d received more than 60 letters by 30 June, less than a week after the referendum result. “It’s so many, I have stopped reading them,” he told sister title Private Debt Investor.

The sentiment was shared by an advisor to foundations and endowments, who’d received nearly 150 different letters. “It’s overwhelming. I’ve lost interest after a while,” he said, adding that “The responses have been all over the board: from ‘this is a non-event’ to ‘it’s a big deal.’”

While fund managers’ IR and compliance departments should be applauded for such prompt Brexit communications, it will be even more meaningful going forward to remind investors of alternative asset classes’ relative resilience during turbulent times.

Most GPs long ago eschewed a “buying low and selling high” strategy reliant on multiple expansion, in favour of intensive value creation initiatives that drive returns in both good times and bad. Now is the time for firms to reassure investors they are more focused on operational excellence than ever – and that alternatives are the right place to put their capital for the long haul.

While there have been some notable studies done on this topic – including Partners Group’s commendable analysis back in 2012 of its private equity outperformance and value creation attribution – the more the industry is able to point to recent, specific examples, the more powerful the message becomes. And the more likely fund managers are to capture – and hold – investors’ attention.

We can help.

For the fifth consecutive year, sister title Private Equity International is bringing the market its Operational Excellence Awards to celebrate those firms that have gone that extra mile to bring true value – and not just a stellar exit multiple – to their portfolio companies, and ultimately their investors.

We want to hear from any GP who has exited a deal in the last 12 months and has a compelling value creation story to tell. The process is very simple: fill in the submission form HERE by 12 August. Then a carefully-selected panel of judges in three regions – EMEA, Americas and Asia – will select the most impressive entries and winners will be revealed in a special report detailing exactly how they added value over the lifecycle of the deal.