JP Morgan Asset Management (JPMAM) has partnered with a financial technology platform to offer wholesale investors greater access to private equity markets.
The global asset manager, together with iCapital Advisors, has announced the launch of a new Australian domiciled fund, providing wholesale investors with access to opportunities in the small to mid-market private equity space.
JPMAM confirmed that iCapital, as the manager of the fund, will invest in an underlying solution that is managed by JPMAM’s Private Equity Group (PEG).
“Private equity plays an important role within a wholesale investor’s portfolio. In general, our analysis shows private equity has outperformed public markets across different market conditions,” commented Ashmi Mehrotra, co-head of PEG.
“Private equity also provides diversification from your traditional core investments and can help to lower a portfolio’s volatility,” Mehrotra continued.
However, she identified active management as “key” when it comes to the asset class, given the wide dispersion of returns that may be delivered.
For instance, when looking at the range of opportunities in the small to mid-market space, JPMAM adopts a “strict” set of criteria to determine if an investment is viable.
“For example, what is the opportunity set? Is there operational value-add? Are there attractive entry multiples? Is there a reliance on leverage? And importantly, what are the exit opportunities?” Mehrotra said.
Mark Carlile, Australia and New Zealand head of wholesale, added: “We are excited to help bring this solution to market and provide wholesale investors access to a sector which has traditionally been reserved for institutional investors.”
Carlile further clarified that the solution was developed on the back of market feedback, which revealed that wholesale investors were looking for access to private equity but at a lower investment minimum, with no capital calls/commitments and regular liquidity.
Expounding on this, Andrew Creber, JPMAM Australia and New Zealand CEO, said that providing access to private equity and alternative solutions to wholesale investors has been a “key strategic initiative” for the firm.
“As a global asset manager, we have the depth and breadth of investment expertise and capability to provide wholesale investors with access to these more niche parts of the market,” Creber stated.
“As appetite grows for more innovative and diverse investment opportunities, JP Morgan Asset Management stands in good stead to bring these solutions to Australia, leveraging the investment expertise of PEG, one of the longest-standing PE firms in the industry.”
JPMAM and iCapital similarly partnered up in December of last year to offer Australian investors a broader range of opportunities in the alternative space.
Namely, the duo announced that iCapital’s technology platform would be used to facilitate the distribution of JPMAM’s select global alternative strategies, allowing Australian investors to explore a broader range of investment opportunities in the alternative space.
“There is a growing appetite and surging demand, especially among Australian wholesale investors, to access and increase their allocations to alternatives which provide additional sources of uncorrelated returns, income opportunities, inflation management and diversification to their investment portfolios,” Carlile said at the time.
