SPVs to boost private market deal making
Deal-making in private markets is set to improve within the next five years, thanks to the growth of special purpose vehicles (SPVs).
According to a new survey from CSC, more than a quarter (29 per cent) of private markets professionals expect to see deal-making improve within the next 12 months, while a further 46 per cent believe that market conditions will improve within the next two to five years.
SPVs are set to play a key role in the growth of private debt, which has led to a spike in optimism among private credit managers. Approximately two thirds (67 per cent) of debt professionals told CSC that they expect market conditions will improve over the next two to five years.
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“Our study has found far more optimistic sentiment among senior private markets professionals, following a few years of significant market volatility, which bodes well for the wider investment sector and global economy,” said Thijs van Ingen, global market leader, CSC corporate and legal solutions.
“Private debt professionals were much more optimistic than their peers working in different sectors. This supports the trend we are seeing more generally in the market, which sways towards private debt.”
The survey found that private market professionals in Asia Pacific are the most cautious, with only 16 per cent believing that market conditions will improve in less than one year. By contrast, in North America and Europe, 37 per cent and 33 per cent of managers, respectively, said that they can already see improvements or expect improvements in less than one year.
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However, CSC found that managers are aware of the regulatory challenges facing SPVs, with greater multi-jurisdiction regulation, and stricter reporting requirements now standard.
“SPVs have become increasingly complex, and far more work needs to be done to manage them—particularly when you factor in new regulations and requirements,” said Delphine Jones, managing director of CSC client solutions.
“However, the SPV ecosystem has also become relatively inefficient, with a wealth of unnecessary complexity. It is in this environment that outsourcing to specialist SPV administrators is also growing.”
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