The research explored the behaviour of investors with $5m (£3.5m, €4.06m) in investable assets across nine countries in Europe, Asia and the Gulf region.
It was carried out in collaboration with Scorpio Partnership and surveyed 337 high net worth individuals (HNWI).
Researchers found 50% of HNWIs are willing to invest at least $500,000 in 2018 in private equity funds and 40% of HNWIs not currently invested in private equity or private real estate funds are likely to invest into these asset classes in the near future.
Adviser driven
More than a third of respondents told researchers the benefit of these investments is to balance their wider portfolio; with a similar proportion led to consider this asset class by their adviser.
Over 60% of the HNW group indicated they were either familiar or extremely familiar with private equity and/or private real estate solutions.
One third of HNW non-investors said they had never been introduced to these investment opportunities and would “rely mainly” on their private banker and financial adviser for access.
Diversification
“Over the past 12 months, we have seen a significant pick up in clients’ appetite for private equity and private real estate funds,” said Claire Roborel de Climens, global head of private and alternative investments at BNP Paribas Wealth Management.
“In this persistently low interest rate environment, investors are looking for diversification and double digit returns to optimise their portfolio’s risk return profile. We are aiming to raise almost a billion euros in 2018.
“The private market funds we are planning to launch over the next six months will allow our clients to fully benefit from exposure to the real economy in Europe, Asia or US where on the one hand, high-performing companies need to develop further and on the other, value-added real estate strategies can be implemented. These strategies respond to clients‘ demand and are differentiating for the ongoing development of BNP Paribas Wealth Management’s activity.”
Investment strategy
Private markets are typically illiquid, long-term investments that follow the “real economy”.
In private equity, clients invest indirectly in unlisted companies at different stages of growth, by supporting their managers’ development strategies.
In private real estate, clients often invest in tangible real assets where value creation is implemented by local experts.
