Elite Entrepreneurs favor tech-focused Private Equity funds
2020 BNP Paribas Global Entrepreneur Report
Some of the most well-known entrepreneurial stories of the past 20 years have come from the technology sector. As new technologies became mainstream, they impact our daily lives through new tools and new services, in the workplace and at home. All sectors are impacted by technological advances. From retail, where ecommerce drives an increasing share of client-facing interactions, to pharmaceuticals, where the research and development for new products happens increasingly through computer modelling, technology is now everywhere and is changing the world.
Many Entrepreneurs have become successful by leveraging the possibilities opened by new technologies and growing their business in this fast-evolving technology-driven world. The newly released BNP Paribas Wealth Management’s Global Entrepreneur Report Part II, focused on Private Equity and Private Real Estate, highlighted the appetite of entrepreneurs to increase their wealth allocation to Private Equity funds. Prashant Bhayani, Chief Investment Officer (Asia) at BNP Paribas Wealth Management, stressed that there was an increasing interest more specifically in thematic funds riding the wave of economic transformation enabled by the digitalization of society and companies.
“Healthcare and technology funds are of interest to these clients, as are buyout funds. Where entrepreneurs may be unable to access opportunities directly, for example mid-market companies in the US and Europe, the managers have the ability to step in and add value in a big way.”
Prashant Bhayani, Chief Investment Officer (Asia) at BNP Paribas Wealth Management
The unique situation and crisis created by the Covid-19 pandemic has accelerated this trend even more. Technologies that existed already for a few years have seen their use exploding as large populations were confined at home and had to adapt to peculiar situation. Use of online communication grew exponentially, while ecommerce and online video saw fast expanding adoption. In turn, such fast evolving usage and consumption patterns created new needs in terms of cybersecurity or network capacity. Adoption of these technologies has leapt in the crisis.
In addition, with the pandemic, the need to continue to invest in medical research and new medicines has become at the front of most government’s priorities. Medical Technologies were already fast growing before the crisis, as digital technologies were already creating new opportunities leveraging data analytics, automation and simulation. As large budgets are being unlocked to ensure medical research will accelerate to fight this pandemic and prevent others, and the digital transformation of medicine and pharmaceuticals enables new possibilities, this segment of the economy seems to be well positioned for the next few years.
In that regards, it is no surprise that two of the key trends earmarked by BNP Paribas Wealth Management in its recently released “Five Investment Themes Post Covid-19 for 2020” were “Benefiting from disruption: 5G and artificial intelligence innovations” and “Innovations in health care”. Technologies, whether digital or medical, have become key factors for the world in which we live and are evolving fast, creating opportunities for investors but also challenges for existing businesses.
Entrepreneurs are by nature attuned to the need to be agile and leverage evolving market conditions. Most of the successful entrepreneurs have had to go through phases of adaptation to consumer demand and market peaks and lows. They understand that these disruptive technologies bring fantastic investment opportunities but also significant challenges that require expertise to assess. As such, entrepreneurs are rationally looking to allocate a portion of their wealth in thematic funds that ride on these themes.
The most successful Private Equity funds are in heavy demand and it is increasingly difficult for all but the largest institutional investors to be able to invest in them. This is the key reason why BNP Paribas Wealth Management has put together a dedicated team focused on maintaining relationships with the best private equity managers on the market. Such relationships allows us to offer our clients the ability to invest in some of those funds.