CEO of HGC Firm shared the pespective on Private Equity Scenarios in ALTSSG

When I was asked if private equity should be preferred in the face of challenges the market is experiencing now, I said yes and for me the reason for that is three-folds:

1- diversification is key in managing portfolios and what people need to realise there are great opportunities amidst the challenges. The shortage of liquity will make assets available below the market value. When properly picked (stick only the necessity) and done (create sustainability), taking advantage of such opportunity will translate into higher profit margin.

2- as a Muslim, I am also motivated to go for private equity due to this saying of the Prophet (PBUH), when he was asked what is the best profession one can have, the Prophet (PBUH) responded: works one does with his own hand and lawful trade. Doing private equity, where you invest then improve or expand it and create real value out of it or grow it, falls within the former, ie, works done by a person with his own hand. When such option is exercised prudently, not just to follow the trend nor fall for the hypes or worse, speculate, it will not go wrong. It will create the best value and returns.

3- for some institutions or offices, it is inevitable because of the mandates or the objectives for setting up such institutions or offices.

There are ways to invest in private equity. Primary or direct option will allow optimum return. This option is ideal for those with extra liquidity or have specific allocation for such purpose. This option requires proper portfolio management and exit strategy. Secondary or indirect option – where investors can invest indirectly, eg, in funds or through GPs. Even for this option, I don’t recommend that you invest and do nothing about the investment. Monitoring is key. While the investors may not be able to be part of the management, if there’s supervisory committee to oversee it, try to get a seat there (including invest in such amount that will allow you a seat there) to ensure you have the say in the strategy and direction of the investment. The advantage of this second option, it allows higher level of diversification and spedier exit. If, however, the objects are part of your core business and/or you have some influence in the demand side of it, I’ll go for the 1st option any time to ensure both optimum returns and value creation.

Again, even if you go for the 2nd option, given the market volatility, inflation, recession, etc, only invest in what people need, the basic necessity (see my previous post: https://hgcfirm.com/dr-hurriyah-el-islamys-advice-on-alternative-investments-in-asianinvestors-event/.

I shared the gist of the above recently in Marina Bay Sands, Singapore as I was asked by MarketsGroup to be a panelist in ALTSSG Forum – Planning for Private Equity Scenarios.