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PwC appoints Sabine Durand-Hayes as Global Leader, Consumer Markets

PwC has appointed Sabine Durand-Hayes (PwC France and Maghreb) as the Consumer Markets Global Leader. Sabine brings more than 25 years of experience assisting private equity and corporate clients with analysis and structuring of mergers, acquisitions and divestitures. During her career with PwC, she has advised various multinational agri-food, fast-moving consumer goods (FMCG), luxury and retail companies on strategic and operational issues, from portfolio management to carve out and integration.

In her new role, Sabine will lead the Global Consumer Markets Industries team, which advises a large network of clients from various industries, including retail, consumer, hospitality and leisure, as well as transport, logistics and packaging, on a range of key areas. In particular, she will focus on optimised omnichannel models; effective supply chain management and organisation, from strategy to execution – enabled by digital, data analytics and new ways of working, including environmental, social and corporate governance (ESG), risk and assurance, tax and legal aspects as part of the solution. She will also continue her role as the Global Relationship Partner for one of the world’s largest global food retail companies.

“I’m thrilled to be taking on this new role in leading our Global Consumer Markets Industries practice,” says Sabine. “The ongoing transformation of the Consumer Markets industries in a context of fast-changing consumer preferences, and accelerated by the COVID-19 pandemic, serves as a reminder of how our PwC purpose – to build trust in society and to solve important problems – guides our work with clients and stakeholders. By bringing our capabilities together, we have unique opportunities to connect with all players, from manufacturers and producers, all the way to distribution and consumers, on how to address common challenges. We can provide experience and solutions that make a real impact for our clients and their consumers.”

Kevin Burrowes, PwC’s Global Clients and Industries Leader (PwC UK), says “The opportunities and challenges facing our clients are unparalleled. In collaboration with other industries, our Consumer Markets practice, under Sabine’s leadership, will continue to help organisations repair, rethink and reconfigure their business models to emerge stronger from the crisis.”

Sabine previously was Retail and Consumer Industries leader in France and more recently led Consumer Markets in Europe, the Middle East and Africa. She leads PwC’s Transactions Services Retail & Consumer teams in France. She presently serves as a member of the Supervisory Board of PwC France & Maghreb since 2017, and led the Strategy commission from 2017 to 2020, providing first-hand experience of governance and control in a multinational business.

Sabine trained and worked in PwC UK and is a member of the Institute of Chartered Accountants of England & Wales. She earned a Masters from ESC Montpellier Business School.

Private markets forecast to grow to $4.9tn globally by 2025

The report, Prime time for private markets: The new value creation playbook, examines prospects for four primarily illiquid asset classes of private equity (including venture capital), infrastructure, real estate and private credit across a range of scenarios for 2019-2025.

The report projects significant growth for the value of private markets of $5.5tn (best case), $4.9tn (base case) and $4.2tn (worst case) depending on how global economic conditions respond to the disruption caused by COVID-19.

Will Jackson-Moore, global leader for private equity, real assets and sovereign funds at PwC says: “The report highlights the continued emergence of private markets as a fast growing and highly impactful portion of global capital markets. Investors continue to look to the sector to deliver the yields that lower risk and more liquid asset classes struggle to match.

Yet this is also an opportunity for private markets to take a lead on ESG and net zero commitments and demonstrate the impact they can make in public perception beyond public markets.”

Opportunities across asset classes

Even in the worst case scenario of a prolonged recession, the projections look ahead to growth of almost 50% up to 2025.

While private equity is very much “the asset class of the moment” there is evidence that there are significant opportunities for growth and returns in areas such as real estate, infrastructure and private credit.

Will Jackson-Moore says: “While opportunities for growth are out there, it is important to emphasise that returns will be harder to find and be more aggressively fought for. Managers will need to be innovative in their approach to value creation and respond swiftly to changing investors and governmental expectations as economies recover from the effects of the crisis.”

ESG and going beyond financial return

Will Jackson-Moore says: “Our research highlights the extent to which financial return is no longer the sole driver of private markets growth. ESG and Net Zero commitments now represent a significant source of value preservation and creation.

Private market managers need to respond by looking at how to apply an ESG lens to investment strategy and product development. Whether it is in impact turnaround initiatives in which ‘dirty’ production facilities are turned green, or building strong commitment to diversity and inclusion at your organisation, these matters are no longer an overlay.”

Asset management industry set to grow by up to 5.6% per annum

Currently controlling more than US$110tn (more than 20 times the US federal budget), the power the asset and wealth management industry has in shaping the future is unparalleled. With global assets under management projected to grow by up to 5.6% per annum to US$147.4 trillion by 2025, it can shape a future which is better for investors, shareholders, the economy and the wider society. This is according to PwC’s new global report ‘Asset and Wealth Management Revolution: The Power to Shape the Future’ published today drawing on data, analysis and expert insights as well as the econometric modelling of PwC’s Asset and Wealth Management (AWM) Research Centre.

The report focuses on a number of key findings and areas for the industry to address, which are pivotal to helping the global economy. Asset and wealth management firms can:

  • Fund the future: There is a widening funding gap which will need to be filled to support recovering economies.
  • Provide for the future: With aging populations, widening pension gaps and challenging demographics, the AWM industry has a key role to play in supporting investors in meeting their savings’ goals.
  • Embrace ESG as the future: With US$110 trillion in assets under management, and growing, this industry has the power to literally change the world from an ESG perspective.

Repair, reconfigure and report are the key areas the industry needs to address as it rethinks its strategy to be fit for the future.

Olwyn Alexander, PwC Global Asset & Wealth Management Leader, commented: “Asset and wealth management firms can channel capital and target investment opportunities to lift economies out of recession. It is important to understand the power the industry has in influencing the future. A better future for everyone; investors, shareholders and the economy as a whole. The world we leave for future generations matters. The industry can act now to realise beneficial change.

“While financial return will always be important, increasingly investors are deciding that social return is just as important. What we’re seeing is asset and wealth management firms that deliver standout returns on both the social and financial fronts will be the clear winners over the coming decade — magnets for investment and able to sustain superior returns for shareholders and partners.”

According to the report, the industry can be a powerful engine of recovery and a force for good in a world facing uncertainty and upheaval. Funding the future, providing for the future and embracing environmental, social and governance (ESG) matters are pivotal to this.

Funding the future: Asset and wealth management firms can achieve superior fund returns as alternative providers of capital.

At US$41 trillion, non-bank lending now exceeds bank lending in advanced economies and continuing low interest rates, coupled with higher capital adequacy ratios, will increase pressure on banks and their ability to lend. This has created an opportunity for private market funds to help finance businesses with strong growth potential but limited access to mainstream funding. By engaging in financing all along the capital structure, the AWM industry can address one of the key goals of the EU’s Capital Markets Union Action plan and improve the private capital markets.

Providing for the future

Pension fund assets are expected to grow to almost US$65tn by 2025.

Within retirement saving, specifically, pension funds now manage more than $50tn in pension assets, and we forecast that this will grow to almost $65tn by 2025. Providing for the future is the other side of the coin to funding the future — the more wealth we can create as a society, the more we can save and the more that will be available to invest. And as people live longer, the asset and wealth management industry can contribute to the resolution of escalating pension gaps and retirement poverty. Saving cash on deposit is no longer tenable in a world of ultra low interest rates and fixed income yields, forcing savers to look for higher yielding, attractive options.

Assets under management in infrastructure funds are expected to double by 2025.

Further opportunities for asset and wealth management firms to provide for the future include making up for the growing shortfall in available infrastructure investment, especially from governments. Within developed markets, there are considerable openings to refurbish roads, airports, hospitals and other such opportunities while accelerating developments in areas such as 5G and renewable energy. As a result, we expect assets under management in infrastructure funds to double by 2025.

Embracing ESG as the future: ESG-aligned funds cumulatively have already outperformed their traditional counterparts.

Increasingly, investors are putting the environmental and social profile of AWM firms on a level playing field with financial return. A growing number of investors expect asset and wealth management firms to make environmental, social and governance (ESG) issues integral to their investment strategies. This shift is already having a revolutionary impact on product design, fund allocation and performance objectives.

PwC’s analysis shows that ESG-aligned funds cumulatively outperformed their traditional counterparts by 9% from 2010 to 2019. Research also shows that diverse companies, in which more than 30% of leaders are women, are, on average, 15% more profitable than those that aren’t diverse, and businesses that score highly on sustainability tend to outperform those that don’t.

A few tech fixes here or a nod to investors’ ESG demands there won’t be enough to survive and thrive in an industry where the front-runners are already embracing these changes and seizing the opportunities.

Kirkland Advises Nordic Capital on Closing of €6.1 Billion Fund X

Nordic Capital today announced the successful final close of Nordic Capital Fund X (“Fund X” or “the Fund”), at EUR 6.1 billion (including GP commitment of 6.5%). The Fund, launched in April 2020, was oversubscribed at its hard cap, and was raised in less than 6 months in a ground-breaking remote capital raise without holding any face-to-face meetings. This is the largest fund that Nordic Capital has raised since its inception in 1989 and surpasses its 2018-vintage Nordic Capital Fund IX which raised EUR 4.3 billion (including GP commitment).

Investors were attracted to Nordic Capital’s leadership, proprietary sourcing methods and proven track record of creating value through business transformation and solid earnings growth in its focus sectors of Healthcare, Technology & Payments, Financial Services and its selective investments in Industrial & Business Services. Nordic Capital’s strategy of focusing on non-cyclical, growth businesses was validated by the strong performance of the existing portfolio since the COVID-19 pandemic started. In addition, Nordic Capital recently received the highest ESG rating from the UNPRI.

Kristoffer Melinder, Managing Partner, Nordic Capital Advisors, said: “The rapid and successful close of our tenth fund is a significant milestone for Nordic Capital. To close at the hard cap in less than six months during the COVID-19 pandemic is a fantastic achievement that highlights the strength of our LP relationships and the considerable confidence that our blue-chip investors have in Nordic Capital. It is also testament to the strength of our team, proven investment strategy, the portfolio performance and Nordic Capital’s track record. We are grateful for the continued support of existing limited partners and delighted to welcome new investors to the Fund.”

Kristoffer Melinder added: “Nordic Capital’s investment strategy is based on finding growth businesses in our focus sectors where we can use our significant operational expertise and financial firepower to create value and, ultimately, excellent returns for our investors. The economic impact of the COVID-19 pandemic will continue to be felt for some time and the most successful fund managers will be those who respond well to emerging trends and market dynamics to leverage new opportunities. Fund X has a strong pipeline of attractive investment opportunities in our chosen sectors across Europe, and globally for Healthcare. The Fund has already signed its first investment in Siteimprove – a leading software company that supports digital accessibility for people with disabilities.”

Fund X attracted investors from across the globe, with investors from every continent including 38% from North America, 27% Europe, 17% from Asia, 15% from the Middle East and 3% from RoW. The investor base comprises a well-diversified mix of institutional investors: public and private pension funds (c. 49%); sovereign wealth funds (c. 16%); fund of funds (c. 13%); financial institutions (11%); and endowments and family offices (c. 10%). The new Fund expands Nordic Capital’s blue-chip investor base with 34% of commitments deriving from new investors. The re-up rate by capital of Fund IX LPs in Fund X is c. 90%. The Fund also drew significant support from Nordic Capital’s own team, as well as portfolio company management teams and industrial advisors.

Pär Norberg, Head of Investor Relations, Nordic Capital Advisors, said: “We are very grateful for the tremendous investor support. We launched this fund in the middle of a global pandemic, which required investors to completely alter their investment processes to enable remote diligence. The success of the fund raise despite these challenges reflects the investors’ considerable confidence in Nordic Capital’s strategy and team.”

Fund X will be invested across Europe, with a mandate for global investment in Healthcare as in the prior Fund and an emerging smaller global mandate also for Technology & Payments businesses.

Nordic Capital’s proprietary sourcing methods have continued to generate a strong deal pipeline despite the pandemic. It has in 2020, announced two new platform acquisitions: Max Matthiessen in May, a leading financial advisor in the Nordic region and Siteimprove in September, a global leader within website experience and digital marketing optimisation. Furthermore, it has supported several transformative portfolio company add-ons and completed two partial exits. Nordic Capital’s current portfolio companies have on average achieved 10% organic employment growth and an 8% increase in annual sales.

The fundraising was led by Nordic Capital’s in-house Investor Relations team, supported by Rede Partners who acted as global placement agent, Transpacific in Asia, Ameris in South America, with Kirkland & Ellis as lead legal counsel, supported by Carey Olsen in Jersey and Arendt in Luxembourg.