As Founder and CEO of Overbay, I thought it was time to start a new conversation about investing in Private Equity.
Over the last twenty years, investors have embraced Private Equity, with the asset class having expanded seven-fold during that time. And it is easy to see why: private equity has outperformed equities and fixed income and given investors access to a wider range of companies and investment opportunities.
So, it’s not surprising that at Overbay we believe strongly that Private Equity as an asset class offers you, an investor, tremendous potential for outperformance. Yet our excitement about the potential of this asset class for strong returns is tempered by our concern that too few investors understand the limitations and risks associated with traditional PE investments.
That’s why at Overbay we are not only passionate about investing in private markets, but also educating investors about the benefits and perils of this asset class. It’s why we’re launching this blog to share our insights and expertise to inform and empower you. This will give you the tools to better understand private equity investing and the secondary market, so you can make the right investment choices for you and your portfolio.
In fact, when it comes to private equity, we at Overbay have come to believe that individual investors – even those with multi-million dollar portfolios – should just stay away from traditional private equity investments. Picking winners is tough, access to top managers is difficult, liquidity is non-existent, capital calls are a headache, deployment is slow…. The list of downsides is high and often outweighs the potential of outperformance.
Yet there is a way to get those PE returns without these downsides: invest through the private equity secondary market. This is the strategy that I founded Overbay to pursue.
Secondary investing enables us to secure a significant margin of safety for our investors. We avoid the cash drag and capital calls investors face with traditional PE. We achieve instant diversification across geographies, sectors, and strategies. And we own a portfolio of businesses that produce strong returns immediately for investors. It’s these advantages that have been at the heart of our strategy since we launched and have earned us the right to invest on behalf of our clients.
What is the secondary market? How can it be used to overcome the pitfalls of private equity? What does a successful secondary market strategy look like and what kind of returns does it offer?
This blog is designed to answer these and more. It will also tackle timely topical questions like, how will rising interest rates impact the private equity market? How do institutions like large pension funds construct their private equity portfolios?
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Sincerely,
Robert McGrath
Founder and CEO
Overbay Capital Partners