Our strong network enables us to offer you access to specialised fund managers and direct private market investments in the areas of private equity, private debt, infrastructure and real estate.
What are private market investments?
Private market investments are capital investments that are not publicly traded on a stock exchange. They comprise acquiring stakes in and financing companies (private equity and private debt) as well as investments in real estate and infrastructure projects. Private market investments differ from publicly traded securities in the following respects:
- Access to investment opportunities
- Availability of information
- Number of investment opportunities
In most cases, private market investments find their way into a portfolio by means of collective vehicles (limited partnerships) or as direct private market investments.
The advantages of private market investments
Private market investments have grown to be an integral part of the portfolios of institutional and professional investors, as they offer advantages in the following areas:
We are of the opinion that private market investments have a return advantage over publicly traded securities. This is justified by the liquidity premium and the exploitation of market inefficiencies.
The bulk of the economy consists of private market investments, as the majority of companies (e.g. SMEs) are not traded on the stock exchange. The asset class therefore offers access to a wide range of alternative sources of risk and return. For example, companies in the start-up phase are not traded on a stock exchange and therefore have no way of becoming a part of a traditional portfolio. Venture funds make it possible to include such investments in an allocation. The synchronisation (correlation) with public markets is reduced or even non-existent in many private market areas (e.g. litigation finance), as the pricing drivers are not or not primarily influenced by stock market prices. This, in turn, increases the stability of the portfolio as a whole.
As collective price finding mechanisms by a large number of market participants is non-existent for private market investments, prices are estimated either on request or on extended time intervals (quarterly, semi-annually). This valuation process prevents irrational and erratic price distortion affecting the portfolio value.
The services we offer in collective private market investments
VP Bank itself invests in the selected private market managers on the recommendation list, ensuring that our objectives are aligned with yours as our client.
The above information does not constitute a personal recommendation to buy, hold or sell private market investments, nor does it constitute legal, financial, accounting or tax advice, or any form of personal advice. Private market investments may be unsuitable depending on an investor’s investment objective, time horizon, risk tolerance, risk capacity, and financial and individual circumstances, as well as due to sales restrictions associated with the private market investment. This information is therefore no substitute for individual advice from an expert or for studying the product-specific documents (e.g. prospectus, information memorandum, shareholders’agreement, term sheet, subscription agreement, etc.).
Private market investments are special, non-standardised forms of investment that are not intended for a wide audience, and are associated with additional risks (e.g. liquidity, settlement, advance performance and business risk of the issuer) that may result in the total loss of the amount invested. Furthermore, they are intended only for investors with sufficient experience, knowledge and expertise to qualify as a “professional client” within the meaning of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on Markets in Financial Instruments (MiFID).