The state of private investing

There has been no shortage of public discussion on the state of the world’s public stock markets. Even President Trump himself hasn’t hesitated to boast about the rapid rise of stock indexes during his time in office.

However, as we’ve been constantly preaching on these very pages, the stock markets provide a very shallow and short-term snapshot of the investment environment. Instead, long-term investors should look at other pieces of information, which is what we’ll do presently.

A rising trend continues

For example, according to a report issued by global consulting firm McKinsey & Company, titled McKinsey Global Private Markets Review 2018: The rise and rise of private markets, which was released in February of 2018, although the rise in the public markets was well documented for the period in review, with the S&P rising by about 20 percent, for example, the private markets kept up the pace, too. Specifically, for the period in review, private asset managers raised a total of almost $750 billion globally, which furthers an upward trend that began eight years previously.

On the local front, the Canadian Venture Capital and Private Equity Association (CVCA) in September of 2018 released its review of Canadian private equity and venture capital, and came up with a number of positive findings. Specifically, venture capital investment continues to rise in Canada, with $1.7 billion raised across 308 venture-capital deals for the first half of 2018, which represents a seven-percent increase from the previous year. This continues a five-year positive trend in terms of size and volume.

All’s well on the local front

In addition, the CVCA reported a robust market for private investment for both early-stage and established firms, with the backdrop of a high-growth and low-interest landscape combined with a high level of “dry powder” (highly-liquid marketable securities or large amounts of cash reserves) boding well for the country’s private-investing sector.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.


Private financing is the new normal

The word financing can have different meanings to different people. For those that often borrow, financing means securing the money and capital needed to either stay afloat or engage in a new venture. For investors, financing is a form of investment where you essentially provide money to those who need it at terms that are acceptable to both parties.

Matching supply and demand

In other words, financing is a relatively simple concept. It’s about matching those who need money with those that can provide it. Financing has certainly evolved over time. As economies have advanced and modernized, financing moved from private and select transactions to essentially institutionalized exchanges of capital. That’s what the banking system has become, hasn’t it?

But, as with so many aspects of life, we’re coming full circle again as we see private forms of financing becoming increasingly more common. There are many reasons for that. In a nutshell, public financing has become highly regulated, highly predictable and, as a result, highly cautious, too. So, people have turned to private forms of financing.

Finding unique opportunities

Again, there are two sides to the financing equation. On one side, there are those that are seeking sources of money and capital. On the other side, there are those seeking to invest money and capital. So, when private financing is involved, these types of arrangements tend to be very unique, less compliant with rules and regulations, and more open to higher returns.

In fact, private financing has grown so much that the Canadian federal government even has an entire website section dedicated to the sector. From private debt and equity, commercial term loans and lines of credit to microcredit, commercial mortgages and angel investing, the number of ways that individuals and organizations can transact in private investing is as infinite as one’s imagination.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.

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