Jeremy Held, CFA, Managing Director & Portfolio Manager, Bow River Capital and Mike Trihy, CFA, VP & Portfolio Manager, Bow River Capital discuss private equity investing and the Bow River Capital Evergreen Fund.
The landscape of private equity investing has changed dramatically in the past twenty years. There are half as many public companies as there were twenty years ago, and half as many IPOs. Most companies are staying private for longer periods of time, or staying private indefinitely, and the private markets are growing three times faster than public markets. As a result, asset allocations are increasingly pivoting to private equity. However, there are sizable obstacles precluding investors from investing in private equity.
As private equity firms have become much more specialized, building a diversified portfolio by sector can cost anywhere from $25 to 50 million, which is a massive barrier to entry for most investors. Moreover, the J-curve of private equity investments, which represents the tendency of private equity funds to have negative returns initially and positive returns as the investment matures, makes investments in private equity less attractive.
A recent survey conducted by RIA Channel & Bow River Capital revealed that the majority of advisors allocate less than 5% of their client portfolios to private equity, citing major obstacles such as a high minimum investments, long lock-ups and a lack of liquidity.
Bow River Capital offers the Bow River Capital Evergreen Fund (Ticker: EVERX), which captures the best elements of mutual funds and private funds and provides solutions to the obstacles that investors in private equity typically face.
The Evergreen Fund is set up as an interval fund, registered under the 1940 act. “We’re set up as a registered mutual fund with an independent board of directors, and we have mandated diversification by the SEC and the IRS. We also have frequent and transparent reporting and valuation, and we have simplified tax reporting,” says Held.
The Evergreen Fund offers access to private equity and middle market exposure. The fund uses a combination of growth-oriented private equity investments, private credit instruments, and liquid securities, to deliver capital appreciation and the opportunity for partial liquidity. It has an investor-friendly structure that minimizes the J-curve, and the fund offers quarterly liquidity with limitations. Bow River Capital partnered with Aksia, the preeminent private market consultant in the industry, as a consultant for the Evergreen Fund.
“We have the institutional access, scale, and pricing power of a billion dollar investor… but unlike an institution, we can write smaller checks. We have a much more flexible investment mandate,” says Held.
The combination of the institutional level of access and information from Aksia plus the asset level information and more flexible investment mandate from Bow River allows for the creation of better risk-adjusted returns.
Bow River Capital is a private alternative asset manager that was founded in 2003 and is based in Denver, Colorado. The firm has over $1 billion in assets under management, and has a strong track record of taking advantage of investment opportunities in less efficient sectors of the middle market sector.
To learn more, catch the replay of Bow River’s recent presentation: A New Era in Private Equity Investing.
Please join us for an educational presentation where we will explore and discuss the following:
- The growth opportunities in private market investing
- The Potential Advantages of a pure-play private equity Evergreen Fund wrapper
- Overview of the Bow River Capital Evergreen Fund (Ticker: EVERX)
- Using an Evergreen Fund as part of a diversified portfolio
- Q & A Session