Australian and NZ investors were among the money as Mercer pulled in a record US$4.8 billion plus into a new closed-end private assets fund.
Highlighting the surging institutional demand for private markets investments, the Private Investment Partners VI (PIP VI) raised almost 80 per cent more than the previous fund in the series that accrued US$2.7 billion.
PIP VI will invest into “private equity, private debt, infrastructure, real estate, and sustainable opportunities, including co-investments, secondaries, and other specialized offerings”, according to a Mercer release.
The new vehicle goes beyond its immediate predecessor, too, by investing in “solutions including credit dislocation opportunities, as well as Leap, a diversity, equity and inclusion-focused (DE&I) strategy”.
Marcus De Kock, Mercer Pacific alternatives investment director, said in a statement: “Private markets have become an increasingly important allocation for investors in 2021, and Pacific investors are no different.
“Across our PIP series and our local domiciled funds in private market asset classes, we’ve seen strong interest and take-up from Australian and New Zealand clients for private equity, private debt and infrastructure in particular.”
However, Mercer NZ funds, including the group’s KiwiSaver scheme, did not invest into the PIP VI, according to a company spokesperson.
“But we are revisiting our strategic asset allocations [for the Mercer NZ funds], including allocations to private equity both domestic and global,” the spokesperson said.
The demand for private market assets has risen exponentially in recent years as institutional investors, in particular, seek to diversify away from richly priced listed markets.
Raelan Lambert, Mercer global head of alternatives, said in a release that with lower returns expected ahead “asset owners and fiduciaries are likely to have a much tougher time achieving their financial objectives… unless they think differently about private market investments”.
“Investors are increasingly turning to private markets because they potentially offer enhanced return prospects compared to public markets, as well as diversification opportunities,” Lambert said. “Alternative investments may also bring new ideas and innovation to portfolios and, in some instances, they can help investors support mission-based issues, such as DE&I and sustainability.”
The growing appetite for unlisted assets also partly explains the looming AMP Capital private markets spin-off, due to list in the first half of this year.
Now housed under the place-holder PrivateMarketsCo name, the AMP Capital unit manages about A$44 billion of real estate and infrastructure assets: late last year the business sold its A$7 billion infrastructure debt arm to US-based Ares Management for A$428 million.
AMP earmarked the private markets business as the funds management growth engine in a strategic rethink last year that also saw it offload the A$60 billion in-house run listed global equities and fixed income book to Macquarie.
The Sydney-headquartered Macquarie is slated to take possession of the AMP Capital listed assets – including the NZ funds management division – by the end of March this year.