With its potential for high returns, traditional PE is a popular investment option for institutional investors. High-net-worth individuals also like to benefit from these growth opportunities but the level of investment needed, combined with the long time-horizon and the risk level, meant that until relatively recently they could not access them.
In 2014 a new breed of, semi-liquid, fund was launched. Instead of a ten-year time horizon, these funds offer a liquidity opportunity every 90 days. The funds are used by wealth managers and private banks to provide high-net-worth clients access to the potential long-term higher returns of PE without the need to tie their capital up for a decade.
Semi-liquid funds have been successful in many markets around the world, particularly the USA, Asia and in Europe, Switzerland, home to many private banks. Key players are Blackstone in the USA and Partners Group in Switzerland. Growth in the sector has been rapid and funds are now pursuing growth in other countries.
Market expansion is being driven in several ways. Large multi strategy private market funds such as EQT, KKR, Blackstone, Harbourvest, etc. are expanding the sector by creating white label semi-liquid funds to be marketed by private banks, while newer entrants, such as Moonfare and Titan Bay, offer technology-enabled aggregator products that give investors direct access to multiple private markets funds, much like many retail platforms. Finally, iCapital helps private equity funds access capital from wealthy retail investors by giving private banks access to the funds while handling the complexities of onboarding and administration that are associated with managing large numbers of clients.
The relative immaturity of the sector, combined with its growth, has led to a shortage of individuals with the necessary skills and experience. Managers who work in PE are used to selling large, complex and illiquid funds to institutional investors. But semi-liquid funds, that have been constructed for the retail market, are even more complex and need a sales message and product that are tailored to the needs of a wealth manager or private bank. Equally, while salespeople at a traditional asset manager have experience in structuring and selling complex liquid public market FI and equity funds, they do not have experience of selling private markets funds.
In addition, the differing legal and regulatory requirements governing investments and fund structures in each country across Europe, add an additional level of complexity to operating in these businesses and, reduce the talent pool further.
This means that for firms that need to build teams to create, market and sell semi-liquid funds, individuals with exactly the right skill set are becoming increasingly difficult to find. The first-mover companies have already recruited from an initially shallow talent pool and, as a result, there are exciting opportunities for outstanding managers in the asset management and private banking markets with the right skills. Individuals from these industries can step into a new product segment and utilise their experience to kick-start the next stage of their career.
Jobs in the semi-liquid fund segment will grow significantly in the coming years. Candidates will remain in short supply, and recruiters will need to work creatively to find the ones with the best fit. To identify our preferred candidates Carpenter Farraday combines a thorough discovery process with an in-depth knowledge of the market and how the businesses in it operate.
We differentiate ourselves through a deep, sector-specific, expertise. Our business covers Asset Management, Private Markets, and Wealth Management and we have a deep understanding of where there are correlated skills and jobs. For instance, while private markets investors have not historically employed wealth sales or product development professionals, our clients in asset management have large teams focussed on wholesale and third-party distribution, as well as dedicated product development and structuring teams, in which these skills can be utilised. We have an unparalleled track record in Europe, Asia and the USA, including building complete teams for global funds looking to tap into the wealth channels.
Recruitment for semi-liquid funds is a challenge for employers and an opportunity for candidates. Our approach, combined with our experience, enables us to align the best people with jobs that are profitable for everyone.