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Rise of Private Equity: Tiger 21, Exclusive Club of Investors, Highlights its Prevalence Among the Ultra-Rich

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Tiger 21 Members Favor Private Equity as "King" Investment

According to Michael Sonnenfeldt, founder and chairman of Tiger 21, a network of ultra-high net worth entrepreneurs and investors, private equity is currently the preferred investment choice among its members. Sonnenfeldt revealed that Tiger 21 members, who collectively manage approximately $150 billion in assets, have tripled their allocation to private equity over the past decade. They see further opportunities in companies exposed to artificial intelligence (AI) and climate-related sectors.

Shift in Investment Allocation

Tiger 21 members, primarily entrepreneurs who have sold their businesses and are focused on wealth preservation, have adjusted their investment portfolios. Cash holdings have decreased to around 12%, while public equities have been trimmed down. Real estate holdings were reduced due to rising interest rates. Private equity has emerged as the favored investment avenue, as it offers the potential for businesses to scale rapidly and outperform the market.

Long-Term Growth Prospects

Private equity has grown from comprising 10% to 30% of members' portfolios over the last decade. Venture capital has also become a larger component within these portfolios. Tiger 21 members recognize the significant opportunities in AI, climate-related sectors, and the energy markets. They believe that these areas will experience fundamental growth over the long term.
Industry Outlook and Potential Challenges
A quarterly report from EY indicates a 15% increase in private equity activity in the second quarter of 2023, with total deal values reaching $114 billion, primarily driven by a surge in Europe. However, not all experts share the same optimism. Dan Rasmussen, founder and chief investment officer at hedge fund Verdad Advisers, highlights potential challenges facing the private equity industry. Rising interest rates and falling tech valuations pose risks, particularly due to the high levels of leverage and premium valuations associated with private equity investments. In conclusion, private equity has emerged as the favored investment choice among Tiger 21 members, reflecting their focus on rapid business growth and outperformance. While the industry faces challenges related to rising interest rates and tech valuations, sophisticated investors continue to allocate significant portions of their portfolios to private equity. As the market evolves, it is crucial for investors to assess the financial fundamentals and potential risks associated with this asset class.

Tiger 21 Members' Investment Preference: Implications for New Businesses

The preference for private equity investments among Tiger 21 members, as revealed by the network's founder and chairman, Michael Sonnenfeldt, could have significant implications for new business ventures. The members, who are primarily entrepreneurs focused on wealth preservation, have tripled their allocation to private equity over the past decade. They see potential in companies exposed to artificial intelligence (AI) and climate-related sectors.

Investment Shifts and Market Opportunities

The shift in investment allocation among Tiger 21 members, from cash and public equities to private equity, highlights the perceived opportunities in the latter. For new businesses, this trend could indicate a promising avenue for securing investment, particularly if they operate in sectors such as AI and climate-related industries.

Long-Term Growth Prospects

The growth of private equity as a portion of Tiger 21 members' portfolios, along with the increased prominence of venture capital, suggests confidence in the long-term growth prospects of these investment types. New businesses looking to attract investment may need to demonstrate their potential for rapid growth and market outperformance to appeal to these sophisticated investors.
Industry Challenges and Business Resilience
While the private equity industry has seen increased activity, it also faces potential challenges, such as rising interest rates and falling tech valuations. New businesses must be prepared to navigate these challenges and demonstrate their resilience to potential investors. In essence, the investment preferences of Tiger 21 members offer valuable insights for new business ventures. The focus on private equity and sectors like AI and climate-related industries could guide new businesses in their strategic planning and fundraising efforts. However, they must also be prepared to navigate the potential challenges associated with the private equity industry.
Story First Published at: https://www.cnbc.com/2023/09/25/private-equity-is-now-king-for-the-ultra-rich-says-tiger-21-an-exclusive-club-of-investors.html
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