Public equity is likely to underperform private equity
With 90% of companies being private, industry winners are more likely to be found in private equity.
The size of the opportunity
Public companies make up only around 10% of all companies in the economy. As a result, the majority of company activity is actually happening on the private side, in private equity. In particular, many of the megatrends that are observed today in line with climate change, digitization and Al and healthcare are happening here to a larger degree.
New industry winners are found in private equity
Likewise companies are staying private longer. Investing in the industry winners on the public side is therefore much more difficult, usually only possible later in the company life cycle when the majority of the company value creation has already taken place.
Long-term corporate governance is key
Lastly, as private companies are not subject to stock price fluctuations and quarterly earnings reports, they are better positioned to have a long-term corporate governance structure in place. Management can identify and execute the best initiatives for the company regardless of time horizon, operating in sync with the board and General Partner.