I recently had the pleasure of speaking with a group of fellow industry experts in a virtual Milken Institute panel on Private Markets: Challenges and Opportunities, where we discussed the difficulties and bright spots that this year’s constantly changing landscape has brought. This topic is of utmost importance as we continue to adapt to the new business environment as a result of Covid-19.
I see 2020 as a year marked by polarization, both in the performance of sectors and of global markets. This polarization has offered significant insights into our future deal flow. First, the success that some sectors have seen, such as the astronomic success of big tech companies, is a stark comparison to the ongoing struggle of some heavily impacted sectors, such as travel and leisure. As investors who believe in the long-term viability of sectors that we know well, we’re balancing the medium-term opportunities to grow our investments in technology or digital-native companies with the long-term focus on supporting companies in struggling sectors. We believe that they will rebound and, we will continue to be a long-term partner for management teams that have global ambitions.
Geographic polarization has led to a division among the financial health of many leading nations. For example, compare China’s projected single-digit GDP growth to the negative GDP growth of many other countries. For our investment companies, China has always been a strong driver of growth and we will continue to support their foothold in this critical market.
When one considers these issues from a deal making perspective, I am encouraged by our approach—one rooted in the diversification of geographies, industries, and talent. This diversification means that while our presence in the APAC region adds to the bottom line or our investments in the technology sector have produced positive returns, there is an opportunity for us to engage with and grow in the areas or verticals that have been hit harder by the past seven months. We firmly believe that such sectors, such as travel and leisure, will rebound over time, and that there is ample room for expansion and partnership. It is part of Eurazeo’s DNA to make bold decisions, which have benefitted us in the past.
More than anything else, however, 2020 has proven the need for leaders across the globe to be flexible. We’ve been tested in a time of heightened complexity we could have never predicted. In April, many of us expected the world to return to normal in October. Now, here we are in October, and we cautiously hope that the situation improves by January. If 2020 has proved nothing else, it has demonstrated the need for investors to be quick on our feet and adaptable, while still being driven by the engine that is opportunity.
Thank you to my fellow panelists and friends Scott Kleinman of Apollo, Raymond Svider of BC Partners, and David Tayeh of Investcorp, as well as moderator Erik Schatzker of Bloomberg TV, for a riveting conversation on vitally important topics.
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