Day 1 | Day 2
Wednesday, 8 September 2021
Registration and refreshments
Global viewpoint: Working the playbook
Private equity investment rebounded aggressively in the second half of 2020 as strong credit and public equity markets helped sweep away much of the uncertainty that had been holding dealmakers back. Asset prices remain elevated in many sectors and debt is cheap, largely thanks to protracted government stimulus efforts. Yet many economies are expected to face challenges arising from COVID-19 through 2022. This will put pressure on existing private equity investments and leave little margin for error on new ones.
- When, where, and how will market dislocation start to present opportunities?
- Which geographies and strategies are most attractive right now?
- What is the outlook for the exit market over the next 12 months?
- What pandemic-driven changes will impact how GPs operate in the long term?
Japan update: State of the market
Japan update: State of the market
Activity in Japan has held up well despite COVID-19. Private equity investment in 2020 exceeded the previous year in terms of capital deployed, spurred by large-cap transactions in areas such as healthcare and mass-market consumer. Exits were down with strategic players generally wary of M&A given the uncertain environment. IPOs represented one of few bright spots. The pandemic may prompt investors to tweak their strategies, but the long-term drivers of deal flow in Japan – carve-outs and succession – are unchanged.
- Where will most deals come from over the next 12 months?
- Do activist investors represent a threat or an opportunity for private equity?
- What are the prospects for GP-to-GP secondaries in Japan?
- Is overcrowding in the market likely to be a drag on performance?
Mid-Market: Seizing the moment
It is increasingly apparent that Japan’s middle market has split into three tiers as a subset of local managers surpass $1 billion in fund size. This evolution is the product of outperformance, with international LPs now more easily sold on Japan strategies. COVID-19 is expected to facilitate succession-related deal flow – business conditions are tougher, the need for outside expertise in areas like digitalization is recognized – but private equity firms also anticipate corporate divestment activity reaching into the middle market.
- How are valuations and seller expectations evolving?
- What can GPs do to differentiate themselves from the competition?
- What lessons were learned from COVID-19-driven portfolio disruption?
- How are local managers developing their value creation capabilities?
LP Viewpoint: Staying committed through the cycle
For Japanese LPs new to private equity, the disruption of the past 12 months might have been an eye-opening experience. Having initially sought to establish potential vulnerabilities in private markets portfolios, they turned their attention to new commitments – and the fact that conducting in-person due diligence wasn’t possible. However, even among the less seasoned investors, the importance of consistent deployment across cycles is increasingly acknowledged. Approaches to strategic development, portfolio construction, and manager selection have duly be rethought.
- What are the information priorities when you can’t visit a GP in person?
- How difficult is it to build a truly diversified portfolio in the current environment?
- What approach should new entrants to the asset class take?
- How do LPs set up reporting and analytics to maximize visibility?
Buyouts: Fulfilling the promise
Japan has never seen more than a handful of $1 billion-plus buyouts in any one year. Will the market take-off in 2021? Many of the ingredients are there. Numerous global and pan-regional GPs have resources in place to take advantage of the opportunity; the stigma attached to leveraged buyouts has eased; and corporates are under pressure to divest non-core assets. Moreover, strategic competition might be less intense in a post-pandemic environment with local buyers put off by difficult restructuring jobs.
- How are GPs set up to address certain sectors or transaction types?
- To what extent has the pressure on corporates to divest changed?
- What are the prospects for take-private deals in Japan?
- How do investors ensure they do not catch a falling knife?
Investor spotlight: The critical role of Gatekeepers in the LP-GP relationship
The appetite from the domestic LP market for private equity opportunities has steadily increased in recent years and as they look to initiate or grow their global alternatives program, they are faced with a range of complex challenges that need to be overcome to make sound investment decision. To help with this endeavor they rely on the expertise of gatekeepers, including trust banks and asset management firms, to manage their capital allocations assisting with fund sourcing, due diligence and a range of other services. In this session a panel of experiences Japanese gatekeepers will share how they support LPs and their role in the decision-making process.
- What advice do gatekeepers have for LPs looking to start or re-up private equity investments under the current environments?
- What risks should LPs consider when making private equity investments?
- How do you perform due diligence on a GP remotely?
- What evaluation criteria do gatekeepers recommend when selecting a GP?
Changing consumer habits: Solving the puzzle
The events of past year have impacted the way people live, work, travel, shop, and communicate. Figuring out the extent of this paradigm shift – and where temporary changes become ingrained habits – is essential to fashioning investment theses. It is difficult to bet on the transformational potential of a traditional business or the sustainability of a new one without an understanding of consumer behaviour. From development through execution, GPs will see their sector knowledge and operational capabilities put to the test.
- Is there any relevant investment case history in this area?
- When is it the right time to get back into industries like travel and hospitality?
- What are the key issues when deciding if a business ripe for digital transformation?
- Which new products and services will come will characterize the next five years?
End of day one
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