US/UK - The recent initial public offering announcement by Apollo is a boon to the private equity industry, as it will help "demystify" the market, said Alan MacKay, chief executive of Hermes GPE.
Apollo Global Management yesterday released details of a much-awaited IPO. In filings with the Securities and Exchange Commission, the firm said it could raise up to $417m through the sale of shares priced between $17 and $19 each. Apollo joins the ranks of US-based, publicly traded, private equity firms KKR and Blackstone.
"I think it's great for the private equity asset class, that some of the major participants in it - and I'm sure others will follow - are now fully transparent, fully analyst covered, fully reported market participants. It removes any anxieties or fears people have about private equity," said MacKay in an interview with Global Pensions.
"All the pension funds and retail investors can have a share in them, and it demystifies private equity as an asset class and that's great," he added.
Hermes GPE runs bespoke private equity programmes for institutional investors and manages some $8bn in assets. Mackay joined last year from 3i, a European private equity firm that itself went public in 1994.
He said the move among large public equity firms to go public is a natural evolution towards the institutionalisation of their businesses.
"There's a choice for these guys which is to scale up and become totally, institutionally digestible, or the historic model which is run on a boutique basis, but there's a limit to how much you can scale that up," said MacKay.
He said managers looking at global deals are more likely to take the public market route as the transparency and coverage that comes along with it will make the firms a safe haven for large, institutional investors.
"Private equity has a little bit of a sense of private funds doing private things, so it's great that the myth busters like 3i, KKR, Blackstone and Apollo are there to show that it's a force for good," he said.
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