Hitting the Target Optimizing a Private Equity Portfolio with the Partners Groups Case Study Analysis
In contrast to the benefits of the two strategies; the FuturePlan might get confronted with the risk associated with primary and secondary investment. The direct and secondary opportunities are considered as unpredictable,which also require the capability of assessing the complicated and challenging transactions, within a shorter period of time. In addition, the managers must have different skills and a highly efficient team, with an extensive experience in making investments in the primary funds. The risk profile of the direct investment differs from secondary and primary fund investment as the capital investment with direct investment is less gradual. The extensive research on the direct investment, shows the significant returns variability with the probability of extreme profits and total loss.(Tom Weidig, 2005).
Conclusion
The Future Strategy has developed its private equity program by spending in closed-end funds of the private equity items, handled by two executives: one zoomed in on the international markets and another zoomed in on the European market.The key challenges faced by Future Plan when they sought an additional external manager for PE, include: lengthy and time consuming screening process. Evaluating the external manager for the private equity is the detailed and complex process, which tends to encompass the great deal more than the analysis of the investment returns.
Purchasing the limited partnership interest in current private equity funds, on the secondary market would, lead towards more exposure to the funds with more mature portfolio, which in turn would accelerate the development of net asset value and provide higher visibility as compared to the primary fund commitment. The secondary market tends to broaden the opportunity set for the private equity investors, offering liquidity and providing tools for diversifying and rebalancing the portfolio............................
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