Schroders
May 05, 2020
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Navigating the uncharted: How can private equity investors respond to the COVID-19 crisis?

03/31/2020

Author:

Lee Gardella, Head of Investment Risk and Monitoring, Schroder Adveq Investment

In addition to the humanitarian crisis, efforts to contain and mitigate the COVID-19 outbreak have resulted in a historic stock market correction and seems to be leading the world into a global recession1. Implications for financial markets are wide ranging, and the variables numerous, so that many investors do not even know which questions to ask, let alone what the answers they need might be.

The first and second order effects and the timeline of the crisis remain highly uncertain. However, our experience with two previous major crises – 2000-03 and 2008/09 – means we believe we can offer some insight on the risk and liquidity management issues institutional private equity investors may encounter in the coming weeks and months and can help them to navigate through this crisis.

We break down the implications for all of the following:

  • Existing investments overall and by strategy, region and industry
    • Valuations
    • Cash flows (contributions, distributions)
    • Reserves for follow-on financings
    • ESG considerations
    • Monitoring and risk management questions to ask
  • Private equity allocations
  • New investment opportunities
  • Possible long-term effects

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The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.
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This site is for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy any security which may be referenced herein. This site is solely intended for use by institutional investors and institutional-investment industry consultants.

Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser, CRD Number 105820, providing asset management products and services to clients in the US and registered as a Portfolio Manager with the securities regulatory authorities in Canada.  Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and as an Exempt Market Dealer with the securities regulatory authorities in Canada.  SFA markets certain investment vehicles for which other Schroders entities are investment advisers.

Schroders Capital is the private markets investment division of Schroders plc. Schroders Capital Management (US) Inc. (‘Schroders Capital US’) is registered as an investment adviser with the US Securities and Exchange Commission (SEC).It provides asset management products and services to clients in the United States and Canada.For more information, visit www.schroderscapital.com

SIMNA, SFA and Schroders Capital are wholly owned subsidiaries of Schroders plc.



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