Merrick McKay (Abrdn): Understanding institutional investors' appetite for Private Equity - Part 2

Merrick McKay, Head of Private Equity Investments at Aberdeen, presents an institutional perspective on the European private equity market. Aberdeen is a global asset manager that manages approximately €8 billion in private equity in Europe through a dedicated team of around 20 professionals.The business is structured around several types of vehicles: funds accessible to retail investors through listed structures, pooled funds, and, above all, custom mandates (separately managed accounts) designed for sophisticated institutional investors. The latter seek portfolios tailored to their specific needs, which requires significant commitments, often starting at €100 million.Investment amounts vary significantly depending on the type of investor. Pooled funds can accommodate investments ranging from €5 million to €50 million, while custom strategies require much larger allocations to achieve effective diversification. In terms of allocation, private equity still represents a relatively modest share of portfolios in Europe, generally between 3% and 5%. Conversely, U.S. investors, operating in a more mature market, frequently allocate 10% or more of their assets to this asset class. This difference reflects a relative lag in Europe, but also significant growth potential as the market develops.This overall approach exemplifies the practices of major institutional investors: diversification, critical investment size, and the structuring of customized portfolios, all with a long-term perspective.