Buy and Hold: the role of long-term private capital in your portfolio

Private equity investing has largely been synonymous with the model of a 10-year fund. However, over the last few years general partners (GPs) have been raising longer-dated funds with fund lives of up to 20 years, representing a new chapter for private equity.

Under the traditional approach, the GP looks to implement a series of value-adding initiatives in quick succession before the fund life matures. Consequently, the average holding period of an asset for a private equity owner is between three and five years.

While the traditional private equity approach has been highly successful, there is a large set of businesses that do not conform to the traditional criteria, but nonetheless have attractive qualities and the ability to create value over the longer term. Specialist long-dated private equity strategies have formed to address this gap. These Long-Term Private Capital strategies are complementary to traditional private equity models and the benefits they offer may help investors fill specific niches in their alternative asset allocations.