Role of private equity in institutional investor portfolios to increase

Zurich, Switzerland, June 9, 2009 – Adveq, a leading independent private equity fund of funds investment manager with offices in Beijing, New York, Frankfurt and Zurich, today presented its current assessment of the private equity market to investors at its AGM in Zurich. According to Adveq, private equity is set to play an increasing role in institutional investors’ portfolios in the future and investors will need to more actively manage their private equity allocations in the context of their overall asset management in order to de-liver future returns.

Market volatility over the past two years has left financial institutions around the world struggling with weakened balance sheets and large scale exposure to equities or equity-like securities has left many, pension funds and insurance companies in particular, struggling to cover their liabilities. Financial dislocation in all the major economies and ongoing calibration efforts to stabilize various systems means that market volatility will continue to be a feature of the next few years.

The various bailout and stimulus packages in the Western economies have not provided the boost markets require to make more capital available to finance businesses. The result is that private equity, in the short term at least, represents the only real source of equity or debt available for funding enterprises. Furthermore, the trends which took root at the start of the market downturn, with equity ownership moving from corporate to government hands and the increasing conver-gence of the risk / return profile of debt and equity, will likely continue, especially in a world cha-racterized by increased volatility.

With this in mind, investors in private equity need to be aware of the increasingly important role the asset class will play within their portfolios and will need to be more proactive in terms of ma-naging their long term exposure to the asset class.

Bruno Raschle, Managing Director of Adveq, comments:
“As banks and other financial institutions find themselves unable to lend or invest and shy away from opportunities which are not guaranteed, businesses of all sizes will be driven to the private market to meet both their debt and equity funding requirements. For investors in the asset class, this means that, in order to include private equity in their risk modeling, they will need more bot-tom-up information about the underlying portfolio companies to enable them to really understand their risk exposure. Most importantly investors need, more than ever, to make private equity in-vestment decisions in the context of the overall investment landscape and take mid to long term macro-trends into account as this will determine the success or otherwise of their private equity investments.”

Raschle concludes:
“We are entering a very different era for private equity. Investors have become used to the con-tinuous upward trend which also supported the generation of positive returns from private equity investments. This is no longer the case. The next decade will be characterized by increased vola-tility in global markets and investment managers will need to be far more rigorous and proactive in managing their private equity investment selections if they are to achieve their return expectations in this new investment landscape.”

About Adveq
Adveq is a leading independent private equity fund of funds investment manager with offices in Beijing, New York, Frankfurt and Zurich. The company currently manages approximately USD 4 billion of assets for its clients. These clients consist almost entirely of international institutional investors including pension funds, insurance companies, family offices and other financial ser-vices providers, that are located primarily in Europe, Asia, Australia and the United States.

Further information
Marlene Caduff
Corporate Communications
Adveq Management AG
Telephone: +41 (0)43 288 32 00