Speaking on the Relative Return podcast, James Martin, managing director and head of global client solutions at Hamilton Lane, said that Australia is leading the way in private equity.
“I actually think Australia leads the way to some extent. I think we have quite an innovative client base in Australia,” Mr Martin said.
“We have a very advanced superannuation system, which I think has really led our investment mindset locally. With the semi liquid structures – we manage one here in Australia, we launched ours before we launched it overseas – while we’ve seen good take-up globally, I think Australia really has been one of the areas which has pushed and that has had the demand for an increased allocation to private equity.”
He added that while there has certainly been appetite for private equity globally, particularly in Europe, there’s a lack of consistent demand across the broader market.
“Certainly, when you look at places like Switzerland, which have a very deep private wealth market, I think their appetite for private equity has been in place for some time,” Mr Martin said.
“The UK seems to have been a little bit slower and, in my experience, hasn’t seen the take-up very broadly. Canada’s actually quite similar to Australia, so we’ve seen substantial take-up in the Canadian market. And the US, you know, more recently, you see a lot more appetite as well.”
Despite being a strong proponent of private equity, Mr Martin said there are risks people need to be aware of and encouraged them not to overcommit.
“It’s like any investment, you have to be very cautious about how much you’re going to be committing. I think you need to be thinking about how much you want to allocate in terms of your overall portfolio,” he said.
“Private equity brings with it some really specific risks. The complexity risk is one, I think the illiquidity risk is another, people need to make sure they think about this in a way which is very long term.
“Whilst there are structures which are available to people now, which offer some liquidity, people should assume that there can be times when there is no liquidity, and they need to think about that in terms of how they can use investments. I would think about this as a small part of your overall asset allocation, but one which could hopefully generate very strong returns.”
Hamilton Lane expanded its Australian presence and offerings in 2019 to provide access to private markets to a wider group of investors.
At the time, Mr Martin said the firm had been encouraged by strong investor interest.
To hear more from James Martin, tune into the Relative Return podcast here.