Alternative Asset Advisory
Provides an array of consulting services to alternative investment managers and investors.
New York – According to a new global survey of alternative investment fund managers by Duff & Phelps, the global advisor that protects, restores and maximizes value for clients, just under 50% (47%) of respondents said that three months is the “breaking point” at which the current economic restrictions impair the ability of businesses to resume business as usual after the lockdown.
Two thirds (65%) of respondents are expecting the impact of COVID-19 on GDP growth to be -3% or more in 2020, while 36% predict net asset valuations (NAV) between Q4 2019 and Q1 2020 would decrease by at least 6% to 10%. Another 30% of respondents believe that net asset values could decrease between 11% to 20%, leading to a longer recovery period, or no recovery at all, on certain assets.
Chris Franzek, Managing Director and Global Head of the Alternative Asset Advisory practice at Duff & Phelps, said: “The results of this survey demonstrate the disparity of expected implications on portfolio valuations given the level of uncertainty that existed at March 31. As we approach June 30, we are working to bring incremental information to our clients to assist them with their valuation processes as well as managing their portfolios and investor expectations in these challenging times.”
David Larsen, Managing Director in the Portfolio Valuation practice at Duff & Phelps, said: “GPs are laser-focused on preserving value and helping their portfolio companies survive the current economic crisis. At the same time, now more than ever, LPs need an objective and transparent view of the fair value of underlying investments to allow them to manage their own liquidity, fiduciary and financial reporting requirements.”
Looking ahead to 2021, some 55% of investors believe that the impact of COVID-19 on GDP growth will still be negative at -0.5% in their market, though 11% are more bearish, expecting a contraction of 3% or more for 2021 GDP. Almost half (47%) agreed that their assets’ sale prices (fair value of their investments) will not have recovered to pre-COVID-19 levels by 2021. A majority (71%) think that the government in their focus market is doing enough to support businesses through the crisis.
Note to editors
The survey received 118 respondents from North America (40%), UK (20%) and Europe (28%). Fund managers were predominately invested in private equity (47%), private debt (15%), and venture capital (7%). The survey was conducted between 3 April – 16 April 2020.
About Duff & Phelps
Duff & Phelps is the global advisor that protects, restores and maximizes value for clients in the areas of valuation, corporate finance, disputes and investigations, cyber security, claims administration and regulatory issues. We work with clients across diverse sectors on matters of good governance and transparency. With Kroll, the leading global provider of risk solutions, and Prime Clerk, the leader in complex business services and claims administration, our firm has nearly 4,000 professionals in 25 countries around the world. For more information, visit www.duffandphelps.com.