Are European markets facing the dawn of a new era, or are they about to go into an economic coma?
The United Kingdom is already re-forming its identity to prepare for Brexit negotiations with the EU, which is creating significant changes across the continent as politicians and policy makers consider whether trade, investment, and services are going to find a new financial home. For those focusing on the emerging marketplace, there will undoubtedly be fresh opportunity, regardless of the UK’s future relationship with the EU. Real estate, private equity, infrastructure, and debt, will look keenly to regulators deciding how to stimulate economic growth as various governments take shape post-elections and negotiations.
What these market changes will mean for LPs and GPs is key, as LPs are becoming less and less satisfied with their lack of control over capital. The LP-GP relationship will change greatly, as it has done already, but the extent to which it will evolve in response to the broader economic climate will require some thoughtful discussion. Additionally, the urge to convert illiquid assets into cash will create further pressure for investors, as managers anticipate the macroeconomic shifts that will occur over the next 2 years and beyond and how to make the most of the next key opportunities.
Due to the potential for significant market corrections, managers must tread carefully and thoughtfully through these transitional periods as they look to the future and develop fresh mechanisms, operational strategies, and approaches to navigate volatile times; otherwise they too may become a casualty of the shifting political and economic tide. Yet caution, however sensible though it may be, must not stifle optimism and the potential to make significant gains. It would be a mistake to conflate the global financial crisis with these European developments, so it is time to consider what the experts are saying about Investing in Private Markets in Europe.