Merrick McKay (Abrdn): Understanding institutional investors' appetite for Private Equity - Part 1

Merrick McKay, Head of Private Equity Investments at Aberdeen, presents an institutional perspective on the European market. Aberdeen manages approximately €8 billion in private equity in Europe, with a dedicated team of around 20 professionals, and offers a range of investment structures tailored to diverse investor profiles, ranging from listed vehicles for retail investors to customized mandates for institutional investors.Private equity investments at Aberdeen are divided between pooled funds and customized strategies. Minimum investment amounts vary significantly depending on the vehicle: between €5 million and €50 million for traditional funds, and starting at €100 million for customized portfolios, allowing for optimal diversification. In terms of asset allocation, European investors remain relatively underweight in private equity, with allocations generally ranging between 3% and 5% of their assets. In contrast, U.S. investors, operating in a more mature market, often allocate 10% or more to this asset class. This difference highlights the growth potential of private equity in Europe. This lag is largely due to regulatory factors and a still-cautious perception of private equity, which is viewed as a complex and costly asset class. However, this perception is gradually changing, with increased accessibility and a better understanding of its benefits. Ultimately, the European market is catching up, with growing adoption of private equity by investors, supported by more accessible investment structures and a gradual recognition of its role in portfolio diversification and performance.