Notes On Fundraising In the Time of COVID-19 Based On Discussions with Sovereign Wealth Funds, Insurance Companies, Pension Funds and Family Offices

I’d like to share with you some findings based on feedback I’ve received during discussions with various investors across the globe over the last few weeks. Much of this was focused on Real Estate, though most of the people I spoke to also invest in other alternative asset classes (e.g.Private Equity).

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One of the early signs of workplace change came the first week of March when I was scheduled to accompany my client to meet with a large Swiss institutional investor who has an office close to Liverpool Street station.

A day before the meeting the investor sent me an e-mail to both myself and the CEO of the firm that is my client. They asked if we could both sign a form that stated that neither of us had visited a particular set of countries, including China, over the last 2 weeks.

None of us had. We sent the form to them.

A few hours later, my contact called me and said, “I’m sorry but we can’t meet in person. We will have to do it over the phone.”

Fair enough, I thought.

A few weeks later

It wasn’t long before everyone was working from home. Over the next two weeks everyone I spoke with was adjusting to a new reality. One that, for many of them, included splitting the day into tranches where they would alternate between work, including audio / video calls with colleagues, and homeschooling.

And while most people realised that we were moving into uncharted territory, quite a few of them I spoke to clung unto the idea that it would be ‘business as usual’ and that they’d continue working from home just as if they were in the office. “Deals would be pursued”, “Transactions will get done”, I heard.

But with time, reality sunk in.

And ever since then, I’ve tried to stay close to investor to understand how the current crisis would affect their investment plans.

Feedback

I’ve spend a bit of time speaking to various investors, ranging from Family Offices to Sovereign Wealth Funds, across the globe.

I’ll be honest, much of those discussions were of a personal nature. The people I rang included good friends. I was keen to understand how they were coping on a human level. It is a terrifying time and many of us have elderly and / or immunocompromised relatives and friends we are particularly worried about. And many people unfortunately face issues related to mental health. Working from home is not easy. When you are cut off from others and receive a steady stream of negative news it can have a negative impact on your wellbeing.

Once these topics we addressed we discussed work.

Let me summarise some of my conclusions when it comes to their investment plans going forward, at least in the near future.

They fall into 3 broad camps.

1. On pause

This camp has stopped investing altogether. They are taking stock of what is happening. The uncertainty related to liquidity, duration, recovery, severity makes writing a cheque very difficult. Instead they are closely monitoring the impact that the virus is having on existing investments and portfolio. They are in a purely defensive mode.

2. Being selective

This camp are and will continue to invest and deploy capital but only into deals where there has already been a good amount of due diligence and work done. This includes meetings with managers / partners, site visits, etc.

I was on a call with a Sovereign Wealth Fund from Asia last Friday and the head of international investments told me that they are no longer looking at new opportunities. All the investments they will be making this year, he said, are a combination of: a) placing money with their existing partners / managers / GPs – people they know well and have worked with for some time; b) investing with new partners they’ve spent the last 3-4 months speaking to and meeting with.

3. Opportunistic

A small number of people I spoke to are looking to capitalise on the current volatility by deploying money into opportunities that have sprung up from the dislocation we are experiencing. Some of them seek out distressed opportunities.

Parting thoughts

The situation is fluid and changing day by day. Nobody knows for sure where we will be in the next few weeks or months.

Generally, in times of difficulty I find it very important to stay close to your clients and partners and in active communication. This isn’t necessarily a time to think about deals or profits but just showing that you care and that the ‘relationship’ truly matters.

We will recover from this global crisis soon and be stronger for it.

In the meantime, stay safe and healthy!

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