New research from diversified financial services group Ocorian shows institutional investors are still confident about demand for alternative asset fund listings over the year ahead as long as funds have a strong ESG focus.
The study by the leading provider of fund administration services, found more than three out of four (78%) of institutional investors focusing on the alternatives sector expect an increase in funds listing this year and next.
More than a quarter (28%) of US and UK institutional investors focused on alternatives are predicting a dramatic increase in funds listing with just 15% convinced that the numbers listing will fall given the current macroeconomic and stock market environment of volatility, rising interest rates and inflation plus war in Ukraine.
However, the results of the study among investors focusing on real estate, private debt, and infrastructure, highlight the need for a strong ESG focus for any fund that is planning to list. ESG Focus Indexes are designed to target companies with positive environmental, social and governance (ESG) characteristics while closely representing the risk and return profile of the underlying market.
Around two out of five (40%) investors questioned strongly agree that it will become harder to successfully list funds without taking ESG into account while 51% slightly agree. Only nine per cent are confident listings can be achieved without an ESG focus.
The increasing focus on ESG issues in listings may help explain why some alternative asset managers will look to raise funds privately as opposed to listing. Around 84% of investors questioned expect alternative fund managers to increasingly raise funds privately over the next 18 months. Just 13% do not expect a rise in private fund raising.
The main reason identified by the research is that private fund raising enables managers to access different types of investors. Institutional investors cited cost and the impact of regulatory changes as the second and third most likely reasons encouraging alternatives fund managers to raise money privately.
Gerry Warwick, Director of Fund Services in UK and Ireland at Ocorian said: “Despite current market
conditions and growing macroeconomic challenges there is confidence about listings which is reflected in the pent-up demand we are seeing. The last quarter of this year and next year could be very busy which may mean funds which are ready to list earlier may benefit. That said there are still concerns about the requirements for listing and that is driving interest in private fund raising.”
As a private capital specialist and global leader in providing Alternative Investment Fund Management
(AIFM), fund accounting & administration, and depositary services, Ocorian fund services can provide asset managers with a quick, cost effective and compliant way to realize fund projects including for cross-border distribution across Europe. Ocorian fund services also assists with the listing of funds on the LSE and a variety of exchanges across Europe and the Americas.
Ocorian is a global leader in corporate and fiduciary services, fund administration and capital markets. It has $270 billion in assets under administration and employs over 1,500 professionals. Supporting and protecting global investment is Ocorian’s priority; it manages over 17,000 structures on
behalf of 8,000 clients including financial institutions, large-scale international organizations, and high-net-worth individuals.
Ocorian provides fully compliant, tailored solutions that are individual to clients’ needs, no matter where in the world they hold financial interests, or however they are structured. The group offers a full suite of corporate, fund and private client services across a network of 20 offices spanning all the world’s financial hubs. Locations include Bermuda, BVI, Cayman, Denmark, Guernsey, Finland, Hong Kong, Ireland, Isle of Man, Jersey, Luxembourg, Mauritius, Netherlands, Norway, Singapore, Sweden, UAE, the UK, and the US.