- Rishi, welcome, what are the key factors
that have driven the growth
of the private market investment industry
to get us to where we are today?
- So there's a few contributing factors.
I think we have to acknowledge first and foremost
that the very low interest rate policy
that has been in effect for the better part
of the last decade, if not longer,
certainly had a hand to play in it.
Because all of the real money investors, pension funds,
endowments, foundations, insurance companies,
they're all effectively managing to deliver a return
that matches their liabilities, their obligations.
And to obtain that return was very difficult
when interest rates were near zero.
So a natural offset to that was taking on some
of that complexity and illiquidity risk premium
that is embedded in private markets investing
and capturing that.
And so that has driven a fair degree of interest
and growth, initially by institutional investors.
And then when the merits
of the underlying asset classes became much more evident
in terms of the lower volatility,
the focus on real value, long-term drivers
of fundamental value creation as opposed to sentiment
and a lot of noise embedded in markets,
it compounded.
So the interest has grown exponentially.
And it is not surprising now that private markets across
private equity, real estate, credit and infrastructure
are much more mainstream for us as institutions
as well as for the private wealth sector.
- What do you see as some
of the most promising growth opportunities
in the digital economy?
- So I think the talk of the town nowadays,
of course, not surprisingly, is generative AI, right?
But if you take a step back,
the application of not just generative AI
but the broader benefits of digitalization is highest
in the corporate sector, in the business segment.
So if you take the perspective that I want to invest
not just in the gold rush, or not in the gold rush
but in the providers of the picks and shovels,
the places that we see being most interesting
in terms of the digital economy are the providers
of the basic foundation that will enable
the application of AI, quantum computing, et cetera,
for businesses being the cloud, being quantum computing,
being the SaaS infrastructure that supports it and so on.
So, you know, the broader ecosystem surrounding AI
is I think really where the digital economy
has got a lot to offer as an investment theme.
The other place that I would want to add,
because sometimes we kind of miss it,
is climate innovation, right?
A lot of innovation is going to be needed
and is coming through
to address the risks surrounding climate change.
And that innovation is naturally relying
on a lot of digital application of both software
and hardware to refine current processes within industry
and across different segments of industry
to make them more sustainable and climate resilient.
And that, I think is going to be a major opportunity
in the next three decades.
- How do business leaders strike the right balance though
between innovation and risk management?
- Yeah, okay, that's a tricky question because, you know
I've spent the better part of the last 30 years
in Investcorp, in aggregate almost 40 plus years now
trying to do exactly that.
Because at the end of the day, you have to recognize
that your investors are giving you capital
on one hand to support that agility
that you bring to the table,
that entrepreneurial spirit,
being fleet-footed in terms
of identifying attractive themes and then opportunities
within those themes, executing upon them,
but just identification is not enough.
You have to execute upon them and
create value and then monetize them.
So all that requires that mindset
of entrepreneurship.
But at the same time,
they're also relying on us particularly
as an institution to deliver that safety net to them.
That risk mitigation, that mindset of 'there
is an upside to be captured, but with contained downside'
And that is really where
that institutional spirit also has a role to play.
So, you know, we kind of use the tagline at Investcorp.
You know, Investcorp is a firm into which
culturally we've tried to embed the twin concepts
of entrepreneurial spirit with an institutional mindset.
And it requires hard work because that is culture,
as you know, propagates through osmosis.
You know, you don't dictate it,
you don't write it down in books.
It happens, you know, through my engagement with my team,
their engagement with their team and so on
and it propagates.
And that's really where I think we
have done exceptionally well so far.
- Rishi, thank you so much. - It's a pleasure.