Fundraising veteran Andrew Sealey shares his outlook

This year will be a very good fundraising year in terms of the amount of capital raised. However, the number of managers who are seeking to raise capital this year is extraordinary and hasn’t been seen before. 15 of the 16 largest funds in Europe are currently raising this year. It’s causing a lot of strain in the institutional market. 

There is the human capacity issue – that LPs (limited partners) can’t process the number of funds and the number of existing relationships who are going back to fundraise – and secondly, from an absolute capital amount, they’re having to be more selective about where they put their capital. 

So although it’ll be a fantastic fundraising year, not everybody will be satisfied, and not everybody will succeed in raising the capital they want. 

Fundraising is going to take longer, certainly for some managers. Therefore this big year of 2022 will run well into 2023. I don’t think it’s going to be this one year of intensity, it’s going to just spread out, because people will take longer.

Will we see more industry consolidation among private equity firms?

We expect to see further M&A among GPs. A good example of that is the activity in the secondaries market, where you’ve had Landmark being sold to Ares and Lexington being sold to Franklin Templeton, Glendower going to CVC, and 17Capital going to Oaktree. And there are more to come.

In the secondaries, you’ll see more transactions done this year probably. 

Interestingly, there may be more consolidation in the direct buyout market.  The transaction involving Barings Asia being sold to EQT is a landmark deal. And may we see more of those, where the larger managers who are either listed or aspire to be listed seek to accelerate their growth, not just from fundraising, but by acquisition. 

You’re also likely to see a move by some of the more traditional asset management groups, who have seen significant erosion of margins in their core businesses and now look enviously at the alternative asset class, who will need to acquire companies rather than grow them organically to grow at the rate they need to. I certainly could see some of the big asset managers seeking entry points into the alternate asset classes. 

Do you have any plans to retire?

I’m still young! Clearly I can’t go on forever but I still enjoy what I do. There is still a lot of excitement and opportunity for the firm, but there’s also a very strong team at Campbell Lutyens.

Compared with other firms, we’ve got a very broad leadership group, so basically I’ve become less important, but I haven’t been pushed out just yet. 

Do you plan to expand the business into any new markets?

We’ll continue to open offices to give us local coverage, and we’re seeking expansion both in Europe and other markets.

Clearly China has been more challenging over the last year. Also, Hong Kong as an office location has been more challenging.  We’ve got offices in Hong Kong and Singapore, but we’ve seen a move from our team moving from Hong Kong to Singapore.

That was initially because of the riots and the local politics, and more recently, the Covid restrictions have been very severe and the ability to travel in and out of Hong Kong has been difficult. Many firms’ Hong Kong offices have had a tough time over the last couple of years.

How have you found remote working?

Although we’ve just closed off our best year ever to the end of April, and we’ve done well during Covid, I don’t think it’s sustainable. If we carried on just doing remote working, I’d be fearful that there would be long term damage to the business. Where we’ve survived, with people being remote, our culture has held true. But ultimately that will erode over time.

We’re a relationship business and these relationships are important internally and externally. And whereas you can maintain strong relationships, it’s more difficult to develop and cultivate new relationships. 

How is the infrastructure market faring?

It continues to expand.  We’ve had a very strong year in the infrastructure practice on a global basis. Managers continue to raise capital, and we see increasing institutional appetite for the asset class.  

In a market where people are more fearful or worried about inflation, that could have a greater relevance.  The market is developing, and as it matures, there are new people that are developing new specialist strategies on issues such as digital infrastructure, renewables and energy transition.

To contact the author of this story with feedback or news, email Sebastian McCarthy