Moonfare CEO Steffen Pauls sat down with Preqin as part of their 2020 Global PE&VC report. Please see the full interview below.
Demand for private equity (PE) is rising as new investors enter the space
How is this influx of private wealth shaping the private equity industry?
Private wealth is a growing pool of capital that is only just starting to allocate to PE. Given the segmentation of the private wealth market, PE firms need to digitalize their administrative functions in order to increase their fundraising opportunities and further diversify their investor base.
Eighty-seven percent of respondents to Preqin’s latest investor survey feel that PE performance has met or exceeded their expectations over the past 12 months. What other factors are driving investor demand, in your view?
PE is a very important portfolio diversifier, due to the opportunities to benefit from operational value creation, market dislocations, and consistent returns. On a standalone basis, PE has outperformed public markets over the past decade, which most sophisticated institutional investors have utilized to meet their return targets.
What red flags should individuals new to the PE industry watch out for?
We think of extreme leverage and heavy dependence on market tailwinds as potential red flags. In order to achieve solid investment returns, it is crucial to invest in funds with strong relative and risk-adjusted performance. Our investment committee uses their industry expertise to select the top funds for our community of investors.
For firms like Moonfare, that offer individuals access to top-tier PE funds via a feeder vehicle, what are the advantages of locating in Germany?
Germany is one of Europe’s fintech hotspots; in fact, it’s the fourth largest in the world. The advantages include access to A+ engineers and a pan-European regulatory infrastructure.
Looking ahead, how do you see the PE industry evolving as more high-net-worth individuals enter the space?
The need for easy and transparent access to PE at fair fees will increase. In turn this will lead to the development of state-of-the-art technology platforms with large communities of like-minded investors.
Dr. Steffen Pauls brings deep experience as a PE industry veteran, with over 15 years’ experience as a professional and entrepreneurial investor. Before founding Moonfare, Steffen worked for KKR as Managing Director where he was responsible for the firm’s coverage of the German market.