HNWI Investment Behavior — International Private Equity Fund

The Challenge
HNWI’s have a much different approach to investing than everyone else, as they can access far more investment opportunities which allows them to invest in alternative investments vehicles, particularly private equity funds. The focus of this research study was to understand the attitude and behavior of High Net Worth Individuals across the US, Europe, Asia Pacific, Middle East and Latin American geographies, when investing in private equity funds. Our client wanted to understand HNWI investment behavior and the reasons for diverting their investments from PE funds to other sector products.

Our Approach
We began by identifying HNWIs across US, UK, France, Germany, Canada, Hong Kong, Singapore, Australia, New Zealand, China, India, Brazil, South Korea, UAE, Middle East and Saudi Arabia, having more than USD 1 million in investable assets for investing in private equity funds. Phronesis then administered in-depth discussions to identify the drawbacks of investing in PE funds from an HNWI perspective, in order to come up with suggestions for areas of improvement. We also estimated the proportion of PE funds considered by these HNWIs in their portfolio construction, and mapped it with other investment options to uncover the untapped opportunities in PE investor market.

Impact
Our findings helped us understand the importance of expert opinion from a strong management team when considering investing into PE funds. One of the key drivers for HNWI’s investment in private equity sector is a strong, honest and visionary management team which can build the confidence of investors for a safe and secure environment. Investors are also more likely to invest in assets which provides trust and security on their investments rather than being attracted towards the market share and brand value. These results helped our client to perfectly comprehend the essentials for investing in PE funds from an HNWI perspective, and publish a report on the same.