Private equity: from ready-to-wear to tailor-made, a whole range of possibilities

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Avoid trivialising the investment offer

Wealth management advisers have gained market share in recent years. For the most part, they are small players, even one-man businesses. But the pace of consolidation has accelerated, with firms being bought out and organised into groups, or pooling their financial product offering through platforms to focus on customer relationships. This trend poses a risk for financial advisers: that the products they offer will become commonplace, whereas their need, in terms of winning new business, is, on the contrary, to stand out from the ‘industrial’ players such as the banking networks, through their proximity to customers and their ability to provide a differentiated, even customised, offering.

This concern for differentiation on the part of distributors is undoubtedly fuelling their interest in unlisted assets. 88% of the independent asset managers surveyed by Aprédia in 2024 believe that private equity funds are attractive investments. In particular, they have offered the asset class to their clients via feeder funds of institutional private equity funds offered in open architecture by a few specialised platforms, generally taking the form of specialised professional funds. This means that independent asset managers can rely on intermediaries who are experts in the asset class, capable of seamlessly managing all the operational complexities involved in subscribing to units in funds that raise money through successive calls for funds and monitoring portfolios using integrated digital solutions, as well as selecting funds from the plethora on offer.

An evolving offering

Over the years, the small world of private equity has become large: as it has developed, it has become more professional, more complex and more diversified, giving rise to players who are highly specialised in a particular market segment and to global platforms capable of covering all private equity markets. By its very nature, the open-architecture offering represents the intermediary's strongest convictions, giving him the opportunity to build his own portfolio. But some independent asset managers may take a different approach, either because they wish to express their own market views, or because they have a particularly typical and homogeneous client base, with, for example, a risk tolerance or historical knowledge of the asset class that is much higher than the average wealth management client.

For them, it is now possible to build truly dedicated offerings. On the one hand, by virtue of the size of the assets entrusted to them, some independent asset managers are now players comparable to private banks. On the other hand, the efficiency of digital processes makes it possible to design offerings from €10 or €15 million of assets under management that are comparable to the mandates offered for many years to institutional investors by the major private equity players. The possibility of launching co-branded investment vehicles under the distributor's banner is a way of reinforcing their exclusive nature. Above all, this tailor-made approach means that the product can be tailored to the specific needs of the distributor and its customers. The range of possibilities is very broad: we can imagine an approach by customer segment with several dedicated funds with different levels of sophistication and access thresholds, thematic approaches (strategic, sectoral, geographical) via a range of dedicated funds of funds or even a vision by vintage with a multi-strategy fund every 12 to 18 months.

This range of dedicated funds brings intermediated private clients all the richness and granularity that characterises today's teeming world of private assets, while maintaining the necessary level of selectivity. Ready-to-wear or tailor-made, the right answer depends on the customer. Beware of the somewhat misleading concept of the ‘democratisation’ of private equity. It is also up to the end client to adapt his or her practices to the specific characteristics of the asset class: an essential element if he or she wants to get the most out of it.

By Thomas Renaudin, Managing Director of Private Corner Read in Gestion de Fortune