02 Jun Impact of COVID-19 in the Alternative Investment Industry
Preqin, a company that provides data, analytics and insights to the alternative assets management industry, surveyed Alternative Investment Fund Managers and investors in April 2020, to gather their views on the impact of COVID-19 in their business operations and the industry as a whole. Whilst we use some elements of the survey in this article, you can find the full survey is available on their website.
The survey found that, in the short term, economic interruption and travel restrictions have led investors to delay investment commitments, leaving fund managers to face challenges in fundraising, deal origination and portfolio company operations.
In the long term, however, the expected impact is more positive. Most investors say that the pandemic will have no impact on how much they invest in Alternatives, and 29% plan to invest more as a result. More than 60% of fund managers, meanwhile, say that COVID-19 has not affected the targeted returns of their funds in the market, and 75% say that they will not adjust their investment strategy as a result of the pandemic.
Key Preqin COVID-19 Survey results:
- Investors are only slightly concerned about their balance sheets, since 54% are saying that they are not concerned with the impact of the denominator effect on their Alternatives portfolios, and 73% are not concerned about their liquidity to fund capital calls in 2020.
- Investment approaches from both fund managers and investors are relatively unaffected. Almost two-thirds (63%) of investors say that COVID-19 will have no impact on their future alternatives strategy and 29% will invest slightly or significantly more. Also, 47% of investors are not avoiding any sectors as a result of the pandemic, and 41% are not targeting any sectors.
In conclusion, the Alternative Investments industry faces short-term disruption, like any other industry, due to the impact of COVID 19 but the long term outlook seems positive.
In line with that conclusion, Laurion continues very optimistic with its long term investment strategy that is focused on alternative assets like Private Debt, Real Estate and Private Equity.