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HNW Entrepreneurs Remain Hot For Private Equity
Tom Burroughes
23 November 2018
Almost two-thirds of high net worth entrepreneurs invest in private equity, with Russia, Turkey, India, Spain and the jurisdictions of the Gulf being the keenest on the asset class, even while some wealth managers fret about valuations, a report by BNP Paribas said. The enthusiasm that wealth creators have for private equity makes sense; entrepreneurs are often said to like using their expertise for building companies to take stakes in other businesses. This also plays to the trend of direct investment that this publication has noted in recent years. “While their search for impact has become more strategic, entrepreneurs are still looking for investment performance,” Sofia Merlo, co-CEO of BNP Paribas Wealth Management, said. “We measured that with this year’s unprecedented interest of Elite Entrepreneurs for stock markets. That’s why we continue to invest in our capacity to advise them with our Chief Investment Officers’ network based in the USA, Europe and Asia, leveraging a selection of 10 annual investment themes,” she added.
Some 63 per cent of HNW entrepreneurs have direct exposure to private equity. The HNW cohort actually appears to be keener on private equity than ultra-HNW entrepreneurs , where 58 per cent of them have direct exposure.
The data findings are from the fifth edition of the BNP Paribas Wealth Management Global Entrepreneur Report, using research from Scorpio Partnership. The study involved an online survey of 2,763 multi-millionaire entrepreneurs in 23 countries, representing a total net worth of $16 billion.
And, as with other studies from the bank, the data shows that respondents see “responsible investment” as a high priority. Worldwide, entrepreneurs consistently choose such investments as their top five for growth potential.
“We already know how Elite Entrepreneurs keep their entrepreneurial mindset when it comes to their private investments. However, this study demonstrates a clear acceleration: these entrepreneurs want to have an impact through their investments as they have with their company. The rise of private investments and SRIs is a clear consequence of this growing expectation,” Vincent Lecomte, co-CEO of BNP Paribas Wealth Management, said.
Among other findings, 85 per cent of entrepreneurs actively support other entrepreneurs through private investments into high-potential companies. The most enthusiastic advocates of private investments are Millennials, who are twice as likely as Baby Boomers to have invested in venture capital funds, start-ups or to hold angel investments.
Technology comes out as the top growth catalyst for future investments: 55 per cent of entrepreneurs invest in tech companies, more than any other sector. The appetite for tech is most voracious in Belgium , India and Singapore .
Some 37 per cent of UHNW individuals think that responsible investing represents one of the most promising opportunities for the coming five years.
Across the sample, the researchers said that the typical portfolio of these entrepreneurs looked like this: equities ; fixed income ; owned business ; cash ; private equity ; real estate ; hedge funds ; SRI , angel investments and philanthropy .