Today I was speaking in a panel on Private Equity, at the European Alternative Investment Summit at the Fairmont Hotel in Monaco. The summit is a quite interesting annual event, bringing together institutional investment and private wealth management industry professionals from throughout North America and Europe for three days of engaging discussions on a wide range of common investment challenges and opportunities in both traditional and alternative investments.
As we move forward, the ever-quickening pace of globalisation compels investors, managers and advisors to continuously look beyond their own borders for innovative solutions to increasingly complex investment decisions. The event is an opportunity to stop for a day or two in our hectic activities and have a meaningful experience exchange with people from both sides of the Atlantic on a wide range of investing topics that are common to all who are charged with the management of institutional and sizable private assets. What is striking with the event is the really global scope of the topics that are discussed and the people attending from all corners of the world.
On the private equity panel, we spoke about how private equity has changed in recent years and what evaluation and selection criteria are used for investments today. I mentioned that we in an activity we run in Sweden make a quite scientific selection, using statistics to find the right companies to approach, based on a carefully thought through set of selection criteria’s and then approaching businesses that may not even have thought of taking on capital for regeneration of growth.
Other topics on the panel was how to work with due diligence and risk management, and which regions and sectors investors should currently look at.
I mentioned the importance of innovation and how crucial it is in todays economic situation with hyper competition to select companies based on three criteria:
The quality of the management team.
Companies with inherent innovation capabilities and potential for disruptive innovation.
The quality of documentation.
The focus on innovation is crucial, as companies who do not innovate to keep up with competition will most likely fail, while fresh private equity investments can be used to develop innovation potential and create competitive advantages that brings the superior returns that investors wants for their risky equity investments.