At Berkeley Assets, we've had the privilege of working with some remarkable individuals who

have achieved incredible financial success. Discover the key characteristics that set our most

Success lies in diversifying capital across various asset classes and risk profiles within Berkeley Assets. This strategic approach mitigates risks and enhances long-term gains, leading to financial success.

Our successful clients exhibit a long-term perspective, avoiding the pitfalls of short-sighted decisions. They understand that wealth accumulation often requires time, and they have the discipline to hold their placements even during market fluctuations.

They approach opportunities with a well-thought-out plan, considering factors such as market trends, economic conditions, and risk management. By aligning their placements with a carefully crafted strategy, they position themselves for sustained success.

Success often favors the bold and those who seize opportunities are no exception. They can identify and capitalise on the emerging trends and lucrative opportunities we present. Whether it's navigating market shifts or discovering untapped potential, their opportunistic mindset sets them apart.

Our accomplished clients confidently rely on us, knowing their financial interests are prioritised. This mutual trust stems from transparent communication, reliability, and integrity that define our client relationships.

Transparency stands as a pillar of our most successful clients. They value openness in their financial dealings and Berkeley Assets upholds this commitment by providing clear, comprehensive, and easily accessible information. Our clients benefit from direct communication with our Senior Associates and have access to the Novus client portal, which provides real-time portfolio updates, exclusive events, the latest company news, and a wealth of additional resources.

To unlock your financial potential and learn more about becoming a Berkeley Assets Client, contact us.

The top traits of our most successful clients

Elevating Traditions with Luxury, Success, and Formula 1 Excitement

In a display of luxury and shared success, Berkeley Assets once again hosted an unforgettable celebration during the Abu Dhabi Grand Prix 2023. As a leading private equity firm, we spared no expense in creating an exclusive experience that epitomises the loyalty we share with our clients, partners, and global team.

Berkeley Assets clients were treated to an unparalleled experience as they witnessed the thrilling Abu Dhabi Grand Prix from the comfort of a luxurious yacht docked beside the racetrack. This annual tradition is a testament to our commitment to providing exceptional experiences that go beyond expectations. The yacht offered a front-row seat to the excitement of Formula 1, surrounded by the backdrop of Abu Dhabi.

As a token of appreciation for the continued trust and partnership, our guests had the privilege of indulging in a curated selection of international cuisine and an extensive array of beverages. From exquisite delicacies to handcrafted cocktails, the gastronomic journey aboard our yacht was a celebration of taste and refinement. Live entertainment added an extra layer of joy, creating an atmosphere that resonated with the energy of the Grand Prix itself.

At Berkeley Assets, we believe in inclusivity, extending warm invitations not only to our esteemed institutional and private clients but also to our dedicated global team and valued partners. The Abu Dhabi Grand Prix celebration became a hub of shared experiences, fostering stronger connections and reinforcing the bonds that define Berkeley Assets as a leader in the world of private equity.

The 2023 Abu Dhabi Grand Prix event exceeded all expectations, with a remarkable turnout that saw the yacht at full capacity. The success of the event was a testament to the unwavering support and collaboration of everyone involved. We extend our heartfelt gratitude to each individual who shared this extraordinary experience with us.

As the festivities concluded, we couldn't help but reflect on the fantastic moments shared during the Abu Dhabi Grand Prix celebration. The anticipation for next year is already building, and we eagerly await the opportunity to build more unforgettable memories with our clients, partners, and team.

Berkeley Assets continues to redefine the intersection of luxury, success, and shared experiences. The Abu Dhabi Grand Prix celebration stands as a testament to our commitment to creating moments that transcend the ordinary, leaving a memorable mark on the hearts and minds of all who join us in these extraordinary celebrations.

Watch a recap of Berkeley Assets Grand Prix experience in Abu Dhabi.

In a display of luxury and shared success, Berkeley Assets once again hosted an unforgettable celebration during the Abu Dhabi Grand Prix 2023. 

Unforgettable Moments at the Abu Dhabi Grand Prix 2023: A Berkeley Assets Celebration

Moving out of the city and towards the suburbs is an ongoing trend that doesn’t show any sign of slowing down. Excluding the obvious price difference and value for money that is achieved from living outside the city limits, there are a few other driving factors. The major drivers have been the attraction for being closer to family, becoming part of a community and the desire for green spaces.

London has attracted real estate owners from both UK and overseas investors. However, with overseas investment now pushing the price of real estate assets to record highs, Londoners are beginning to look elsewhere to live. When looking at pricing, Zones 1 and 2 in London typically vary from 600GBP/SQFT to 900GBP/SQFT, and can often be a lot higher for luxury developments.  Out of town suburban areas, within the commuter belt (less than 1-hour commute times into Central London), can be priced at 300GBP/SQFT to 400GBP/SQFT. With travel links now much more reliable and young professionals with families being priced out of the market, they are often left with no choice.

While the trend for moving outside cities, in particular London, is not something new, the lockdown has highlighted the difficulties and downsides of city living. After being trapped in properties smaller than their outer city counterparts, with less access to a garden and suffering the inflated rental prices, people have begun to revaluate. Also, as the proximity to the office becomes negligible with remote working, the pros of urban life are becoming less pronounced.

Of course, migrating to the suburbs is not unique to the Covid-era; the Office for National Statistics (ONS) figures show 340,500 people left London in the 12 months up to June 2018, and 336,000 the year before (the largest numbers since 2012). However, it has changed the housing demographic and fundamental real estate market over the last 10 years.

For Berkeley Assets, real estate is our underlying focus across all sectors we invest in. As a private equity firm, it is crucial to identify opportunistic investment areas within our field of expertise. Thus, at Berkeley Assets, we have moved away from central London developments unless particular opportunities of note have presented themselves. These have typically been one off projects, where the underlying fundamentals have provided a solid platform for income yield and capital gains. We have focused on up-country towns within commuter distances of urban metropolises, both in the North and South of the UK.

As land prices have been forced up due to furious competition, Berkeley Assets has focused on more suburban areas. Furthermore, we have spread our portfolio across student accommodation, assisted living and social housing developments. It was through our rigorous due diligence in trend analysis that has allowed us to stay abreast of real estate trends within the UK. This has proven the need for us to be adaptable and change focus when required to ensure both income and capital yield.

London has attracted real estate owners from both UK and overseas investors. However, Londoners are beginning to look elsewhere to live.

Landscaping the Real Estate Arena in and Around London

Landscaping the real estate arena in and around London

The current crisis has left uncertain predictions of the long-term effects on the global economy. One question at the forefront of most people’s minds is: will there be deflation or inflation in our future? 

Inflation shrinks the value of money over time and decreases the future buying power of money. High levels of inflation can have dangerous consequences, such as a decrease in living standards due to unaffordable high costs and massive devaluation of cash savings. During healthy economic times, many countries target a moderate inflation rate at around 2% per year to encourage economic growth, maintain international competitiveness and to avoid deflation.

Deflation, on the contrary, is seen as a general decline in prices. A dangerous deflationary spiral occurs when falling prices cause further downwards pressure, creating expectations of further price reductions, and therefore reducing consumer spending. 

Experts are having opposing opinions on where the current crisis will lead us in the short- and the long-term. Some experts criticise large government programs and fear high levels of inflation may follow. If the demand, which is being injected into economies, exceeds the supply, prices will start to rise. Experts argue this can lead to inflation just as it did during the past decade after the 2008 crisis, when real estate, stock and other asset prices peaked at extremely high levels.

Others favouring the idea of deflation are highlighting stumbling oil prices, dropping commodity prices and high rates of unemployment as indications of low inflation or possible deflation. Reduced consumer spending and high unemployment rates predict that demand will continue to be weak over the next 6-12 months. Some are assuming to see the same outcome as seen during the 2008 crisis when a boost in liquidity and easy money failed to push up consumer prices in the short-term.

Private equity firms have to consider two major factors during such times; their borrowing costs and how to price assets for purchasing. For borrowing costs, the risk of high levels of inflation may see debt becoming more expensive. In times of inflation, lender interest rates may see hikes due to government base rate increases, which are then passed on to the borrowers. When it comes to pricing assets, the value of future cashflows decreases, so subsequently the asset purchase price is reduced. Managing vendor expectations will now be more vital than ever to agree on sensible purchase prices for assets. 

In times of uncertainty, our clients prefer to know that active stewardship is a preferred method of ensuring capital growth, rather than relying on the whimsical metrics that control public markets. Active stewardship provides the ability to walk away from projects that do not fit our criteria and take advantage of opportunities caused by market anomalies. Berkeley Assets protects its capital against inflation and volatility by investing in globally diverse tangible assets. For our clients, a fixed return above the average inflation rate allows them to grow their capital and shield it from market volatility. 

Olivier Blanchard, from the Peterson Institute for International Economics (PIIE), analyses the chances of inflation and deflation in the post-COVID-19 economy.

Inflation or Deflation - What Can We Expect Post Covid?

Inflation or deflation – What can we expect post COVID? 

As capitalism plays out and employers across the globe find themselves presented with yet another economic downturn, the automatic first step many companies take to lower costs is to reduce headcounts. Most companies will have a layer of fat that can be trimmed when a reason or cause presents itself.

However, it is known that rising unemployment creates a self-reinforcing downwards spiral. Laid-off employees spend less, while still employed workers will be more careful with spending and increase their savings out of fear due to uncertain job markets. This overall decline in spending leads to a further decrease in revenue for businesses and ultimately to more layoffs. 

In addition to the negative economic impact that widespread layoffs entail, companies have learned the difficulty of rehiring once economies recover. This method is often an expensive and time-consuming strategy. Thus, in the current crisis, many firms have chosen a different path and decided to implement firmwide pay cuts rather than opting for layoffs, providing a glimmer of hope that the economy will rebound faster than usual.

Studies have shown that announcing pay cuts can be fraught with turmoil as it is usually the firm’s most qualified employees who leave and actively seek out new opportunities when pay is reduced. However, COVID-19 has changed the established dynamic since the negative effects of the pandemic have impacted almost all industries and led to a hiring freeze across businesses. Thus, employees are more likely to accept a temporarily lower pay due to limited alternatives.

At Berkeley Assets, we recognize the distinctive advantages of reducing salaries rather than laying off employees and decided that retaining our staff is our primary aim. We are proud that we haven’t had to lose a single member of our team. Our team was able to use their annual leave plus unpaid leave if needed rather than opting for layoffs. A crucial impact on this decision making was the fact that we know how difficult it is to find, train, and keep our staff as we invest heavily in our office culture and team building. 

Berkeley Assets understand that an efficient and positive employer employee connection is built upon consistent values together with the understanding that it is a two-way relationship where loyalty flows in both directions.

As capitalism plays out and employers across the globe find themselves presented with yet another economic downturn attention turns to headcount. Read More.

Layoffs vs Pay Cuts: Berkeley Assets Viewpoint

The Berkeley Assets viewpoint: Layoffs vs. Pay Cuts

The current moment marks a very opportune time for us and our clients, with significant earning opportunities amid the dislocations caused by both the COVID-19 pandemic and Brexit aftermath. 

A combination of low asset prices, uncertainty, low interest rates, depressed valuations and distressed sellers have come together for Berkeley Assets and indeed other private equity (PE) firms. With vast cash reserves, once a drag on returns, now becoming an immensely valuable tool. The landscape has changed in our favor, and there is no doubt that PE will own a larger share of the world’s GDP after COVID-19, than before. 

PE can move fast to acquire, but remain patient on disposal. As the need for liquidity increases, private capital is available, with debt purchasing already as low as 60% of face value.  CalPERS (Californian Public Employees Retirement System) the largest public pension in the US, has recently raised its exposure of private credit and use of leverage, with a recent deployment of $64 billion away from the volatility in public markets. CalPERS, is ramping up its exposure in private equity as it is one of the few asset classes that can outperform the existing low yield and low growth environment. 

Any crisis evokes increased sell-offs; the first call to action is to select potential winners among the more obvious losers. In 2020 it is clear that tourism and transport are the victims, but we still haven’t seen the full fallout of this pandemic. Regardless of how tempting an opportunity may appear, our clients still prefer Berkeley Assets to make more secure asset purchases within a conservative and resilient sector like real estate. 

UK real estate has always been desirable as an asset for the global community, but much of it was focused around expensive ’trophy asset’ London holdings. COVID-19 ushered in more potential for remote working, thus making commute distances a lesser part of the decision-making buying process. As such, leafy, picturesque suburbs will only gain in appeal compared to their city dwelling counterparts.  

In light of further expected rises in unemployment, we remain resilient on our rationale for affordable housing and assisted living developments, as one of our key value-add strategies. Assisted living and affordable housing projects provide yield protection, both capital and income, due to the ease of letting and ability to exit, especially in the backdrop of the market saturation for high end developments. In this economic environment, these factors are key for us and our clients.

Regardless of the economic conditions we face, whether that be adverse or fortuitous, it is certainly not the time to lower our stern and ethical due diligence that has stood the test of time throughout the history of Berkeley Assets.

Making Opportunities for a changing landscape: UK real estate is a generational buying opportunity for investors. Find Out More.

Opportunities in the Changing UK Real Estate Landscape

With the US and China firmly in the spotlight over the recent pandemic, we look at how two of the most powerful economies are dealing with COVID-19. 

The pandemic has exacerbated the geopolitical recession, with the US evading their leadership role in the international response and China taking full advantage of this absence. This builds on a trend that started before the outbreak with the US increasingly looking inwards with regard to its foreign policy. The US had already begun isolating itself and cutting foreign ties, whether that be the Paris Climate Accord, the Iran nuclear deal or the disengagement with the United Nations.

However, while the rest of the world continues to suffer, China inches toward a full recovery, despite the role they played in the origin of the outbreak. When the province of Wuhan showed signs of a second outbreak, Chinese leaders ordered to test all 11 million residents in 10 days. When compared with the US, the small province of Wuhan has completed nearly 60% of the testing that the entire 50 US states combined have achieved. 

As China continues to achieve success with containment, they are likely to use these gains to tout their own governance model. China may well reach out to provide international assistance to a number of countries, including US allies. They will likely do so with the conditions that the implementation is led by Chinese companies and transactions are conducted in the Chinese currency. Furthermore, as the US presidential election nears, Trump is likely to strike out more aggressively at China. China will no doubt react, with further moves like the recent ban on US journalists in the Chinese mainland and Hong Kong. 

China is now effectively challenging US supremacy and is expected to pass the US in terms of nominal GDP by 2027. With the onset of COVID-19, both economies are looking at their domestic markets as travel restrictions and supply chains are disrupted. Add to this an expedited decoupling process between the two super powers and you have a strong likelihood that the balance of power could shift. With a homegrown consumer market four times the size of the US, if isolation is the key to winning this battle, China will overtake the US sooner rather than later. 

However, with this decoupling becoming ever more prevalent private equity firms are seeking out these market dislocations, as they deploy vast sums of capital to take advantage of both reduced borrowing costs and lower asset prices. Given China’s sheer size, growth trajectory and increasing consumer wealth, we expect the pool of investment opportunities to only increase, especially for private equity firms looking for exposure to Chinese markets.

With the US and China firmly in the spotlight over the pandemic, we look at how two of the most powerful economies are dealing with COVID-19. 

Has Pandemic Accelerated China's Closing Gap on the US?

China - Has the pandemic accelerated China’s closing gap on the US?

As the global economy continues to navigate volatile markets through the global pandemic, private equity (PE) continued to register healthy results in Q1 2020. Assets under management (AUM) are likely to keep trending upwards. This is due to continuous success in raising fresh capital as institutions don’t want to lose out on unique buying opportunities, combined with a reluctance from PE managers to sell assets in the current environment. 

Capital raises into PE firms have shown no signs of slowing down with Blackstone’s chairman, Steve Schwarzman, noting that $27.3 billion was raised during the first quarter, with $12 billion raised in March alone. This trend was echoed across the Big Five (Apollo, Ares, Blackstone, Carlyle Group and KKR) with Apollo aiming to increase target sizes for certain funds. Additionally, the CFO of Ares, Michael McFerran, commented in the latest earnings call that 74% of the capital raised in Q1 was from existing institutional clients increasing their commitments to take advantage of the environment.

However, it is worth noting that private equity firms must adhere to Generally Accepted Accounting Principles (GAAP) and, as such, uncrystallized gains and losses must be included in all reporting figures. As firms hold onto devaluing assets, this reporting principle has created steep drops across the Big Five’s reported profits. 

To put this into perspective, stock market performance in Q1 showed the Big Five dropping between 44% and 54% compared to the S&P 500’s 33.9%. However, they still significantly outperformed the S&P 500 over the past year to date, even when considering the S&P 500 hit its all-time high while riding the biggest bull run in history. Apollo, as the lowest performing of the Big Five firms, showed a peak gain of +43.2% year to date, while the peak gain of the other four averaged out at a phenomenal +88.4%.

The Big Five, and PE as an industry, are navigating through market volatility, by increasing assets under management due to a weaker exit environment whilst still luring in fresh droves of capital. Management fees have enabled consistency and PE firms are continuing to see fundraising success. New strategies through mergers and acquisition activity will likely also add to AUM and future earnings, in order to weather the current storm and foster further success. 

The First Quarter 2020 Private Capital Quarterly looks at performance and trends in venture capital, buyouts, private debt, and private real estate.

Oil has dropped below zero. A historic moment for us all to witness, and there will likely be more historic events as this pandemic unfolds.

A shock to investors, but a lesson that should be learnt for anyone who has been caught up in the recent stock market rally in Mid-March.

This Monday saw oil prices dip below zero with WTI Crude (West Texas Intermediate), the US benchmark for oil, dropping to negative $40 USD. This is an extreme case of supply exceeding global demand, due to OPEC’s (Organization of Petroleum Exporting Countries) over supply position and COVID-19’s downwards pressure on global demand. 

The negative price of oil is due to storage costs, amongst other things. As people shelter at homes and businesses have been forced to close, the commodity has waned in demand. This has resulted in offshore oil tankers increasing their daily storage rates from $30,500 USD per day to $72,500 USD.

The Bulls are quick to note that this is a market technicality as short-term storage costs have caused this reaction on this particular futures contract (a contract that allows traders to speculate on the future price of oil). They are saying that it is very typical for the current price of oil to drop below the future value; it is the nature of trading.

However, everything to one side, oil at negative $40 USD is not the norm. Since mid-March, global stock markets have rallied with the S&P 500, the US benchmark, jumping 26%. This has been due to government intervention from the US Federal Reserve as they pledged to inject $2TN USD into US businesses and bond markets. As the Fed has neutralized the impending threats of COVID-19 to the US economy, this has provided assurance and improved market sentiment.

However, the idea that this is the beginning of an organic recovery as markets return to normality is a bit far-fetched. Peter Oppenheimer, chief global equity strategist at Goldman Sachs has said that “this rally is far too fast and there are still downside risks to be seen”.

Following the perception that a floor price for oil had been reached at the end of March, the drop in oil prices to below zero should serve as a warning to everyone. This is a clear signal that the global economy is in deep trouble and should indicate that this recent spike in the global equity markets is a knee jerk reaction to stimulus packages, not the beginning of an organic global recovery. The worse may be still to come.

Oil below Zero! - An unforgettable date in the history of US & international crude oil trading and a lesson for the Bulls.

For prospective deal making there are a few global key interactions that are important for PE firms to consider. With a view to that we turn our attention to the last economic decline in a bid to understand what the future may hold. 

Deal making will understandably decline as a natural follow on from this economic climate. As purchasers demand lower prices and vendors hold out for better bids, there becomes a market mismatch for deal making. However, vendors will be likely entering into the market out of need, rather than want, providing an obvious bargaining tool for purchasers.

Lending will tighten; however, we doubt it will completely freeze as it previously did in 2008. We expect lending liquidity to reduce, especially on highly leveraged deals. This will naturally push up required equity stakes, but likely reduced asset prices will keep loan to values at sensible levels. However, 2019’s typical 80-85% loan to value on deals will be anticipated to decrease.

As PE firms move to fill this funding gap, this could lead to two distinct trends. Firstly, firms may decide to call the unprecedented amounts of unspent committed capital (commonly known as dry powder), currently valued at 2.5TN USD. This will put a liquidity pressure on investors (commonly known as Limited Partners) that already have agreed commitments in place.

Secondly, the other trend we may observe is firms plugging some of this liquidity gap as banks back off the credit scene. Since 2008 the level of opportunistic private lending funds has increased three-fold as PE firms look for short term dislocations to lend against at favourable rates. Favourable bridging finance or ‘loan-to-own’ financing will begin to emerge over the next 6-12 months. This will likely be an area of much controversy as PE firms will be providing predatory lending to distressed companies.

Competition for available deals with solid fundamentals will certainly increase in the favour of PE firms, just as it did in 2009. As public markets deflate, corporates will hold their cash and provide PE a great platform for bidding on deals.

Overall, deal making will decrease, but deal value may well increase. What’s more important now more than ever, is systematic and rigorous due diligence modelling for ultimate down case scenarios. Relentless stress testing and risk analysis will be of the utmost importance. Following this, PE firms may well be presented with some of the best long-term opportunities that have been seen in this Millennium. 

Private equity buyers have never had so much cash to put to work; they are already looking to make new investments in companies that will survive the lockdowns.

Is Private Equity Covid-19 Resistant? Will Deal Making DRY-UP?

Is private equity COVID-19 resistant? Will deal making dry-up?

The first 3 months have been an unprecedented start to 2020. January, saw Australia face an emergency with bushfires killing half a billion animals, while Iran/US tensions took to new levels and the United Kingdom formally withdrew from the EU.

February saw COVID-19 rock the global markets causing the Dow Jones Industrial average to plunge by 4.4%, its largest one-day decline in history. March has seen the outbreak of COVID-19 spread so vastly, that the western world is preparing for a shutdown in order to prevent further catastrophe. 

In a world controlled by media, we have to look at the raw facts to understand the scale of the problem. Year-to-date, the key figures for financial markets are: -

The global sell off has been seismic and how long it will continue for is an unknown, given the unprecedented nature of the situation. In times like this we turn to the history books as we try to comprehend how long this may continue for. Robert Toru Kiyosaki, the famous American author once said “the best way to predict the future is to study the past”.  So let’s consider the recovery times of some of the major historic stock market crashes (using the S&P 500 as a metric):-

2007/08 debt crisis – 5 years to recover loss

2000 Dot-com bubble – 7 years to recover loss

1987 Black Monday – 4 years to recover loss

While we are concerned about the health of ourselves and loved ones, our financial health can often be overlooked. This can be detrimental to goals and targets that have been put in place previously.

With just over 306,500 cases and 13,036 deaths recorded globally, COVID-19 will continue to spread for the next 2- 3 months. So, while drastic measures are being taken to protect you and your family’s health, what measures have been taken to protect your wealth? And are drastic changes needed?

What options do we have in recouping this loss? The obvious option is to stay put and ride out the sharp decline. However, how do we know what the future looks like? Will it be a short-term recovery? Or is there more turmoil to come?

While we may not be able to agree on what the future will look like, we certainly can agree that the future holds a lot of uncertainty. Therefore, to prepare for this uncertainty, we must prepare with utmost reassurance and predictability. By doing so, we can find clarity during the most tested of times. 

It is of no surprise that many clients are now looking towards fixed returns to help salvage any losses that the unpredictability of COVID-19 has brought. The rational is simple; fixed returns during a time of inconsistency and insecurity.

At Berkeley, we are seeking buying opportunities for our asset purchases, as prices have been driven down through fears of global recession. Recapitalising assets has also been a key strategy for us as the Bank of England has reduced the base rate. However, our asset selection standards remain at the same diligent standards and are more important than ever in times of instability.

The age-old rule of ‘don’t put all your eggs in one basket’ holds true for all walks of life; however, none more so than for asset allocation in a portfolio. The concept is simple, but often overlooked. When you apply for a job, you don’t just apply for one, you spread your risk by sending your resume to multiple companies.

Diversification is a simple strategy to risk mitigation, by allocating capital to different types of investments, whether it be various financial instruments, different industries or different asset classes. It is based around the principle that returns will be maximised by having various areas that would react differently to the occurrence of the same event.

Diversification is not a guarantee of preventing loss, but what it does allow you to do is reach a financial goal by minimizing risk. Risk can be defined in many ways, whether that be geopolitical risk, timeline risk, currency risk or asset class specific risk. Either way, risk can be systemic or non-systemic and a diversified portfolio aims to balance risks. This is typically represented by a lower return, but also more consistent and less volatile growth.

As a very rudimentary example, let's say you have a portfolio of only Chinese manufacturing stocks. If it is announced that Chinese manufactures are going to have trade tariffs imposed and all exports will now be more expensive, share prices of Chinese manufactures will likely decline. That means your portfolio will experience a noticeable drop in value.

If, however, you counterbalanced the Chinese manufacturing stocks with a couple of US manufacturing stocks, only part of your portfolio would be affected. In fact, there is a good chance that these stocks would climb, as they become more competitive globally.

Asset class diversification is also key. Different assets such as bonds and stocks will not react in the same way to adverse events, such as global recessions. A combination of asset classes will increase your portfolio's robustness to market swings. 

With global markets ever more connected, the simple rule of bonds and stocks moving in inverse directions does not necessarily hold strictly true anymore. Given this diversion, people can also choose to diversify between private and public listed markets. And while stocks climb to record highs, private markets seem more understandable and attractive to clients. 

No one should hold purely public market exposure and no one should have only private asset backed placements; clients should hold a balance between the two, with weightings dependent on their view of the potential growth in each market.

Diversification is a risk mitigation technique that attempts to reduce losses by allocating investments among various financial instruments. Find out why diversifying Is important.

Understanding the Importance of Diversification

The markets are filled with optimism now, but as the equity markets storm ahead, is there a dark ominous cloud of recession looming in the background?

2019 was a bumper year for the S&P 500, rising 28.9% in 2019, while the MSCI World was up 23% in dollar terms. The raging bull market still shows no signs of stopping……or does it?

Whether you agree or disagree with the current state of the market, you just need to look at key market fundamentals to gauge a sensible opinion. 

Citigroup’s chief U.S. equity strategist, Tobias Levkovich, has a few concerns. His major worry is based on a Federal Reserve survey of senior loan officers, in which banks report if they are easing or tightening credit conditions. 

When the report shows the latter, it tends to signal the economy will run into challenges in about nine months. He notes how January’s 2019 loan report of tighter conditions, was followed by manufacturing contraction in September 2019. This same tightening has just happened in November 2019, so will likely lead to a following contraction in 2020.

Almost half of the world’s large investment funds, such as pension schemes, endowments and insurance firms, think the stock market is due for a correction in 2020, according to a survey of 500 funds worth a collective $15 trillion.

With institutions pulling away from equity markets, where are they placing capital? The hands down winner was off-market “alternative” investments, a catch-all term for property, private equity, infrastructure, certain hedge fund types and illiquid debt funds. Portfolio allocations increased from 17.5% to 18.7% for these type of investments — an implied net investment of around $180 billion, based on total assets of $15 trillion in the survey.

Andrew Benton, head of northern Europe for Natixis Investment Managers, said that big-money investors “expect a global slowdown to come sooner rather than later”. 69% of respondents said countries interfering in one another’s elections is becoming an increasing problem around the world, and 64% said the US presidential poll next year will be a major source of market volatility.

Institutions, across the globe, have increased appetite for yield substitution away from equity markets, with a long-term trend now moving to private debt and equity instruments. While a lot of institutions have begun to act; some institutions still remain neutral.

What is clear is this….. timing the market can be a difficult and near impossible task, but 2020 is set to be an interesting year with the current geopolitical environment expected to weigh negatively on the financial markets.

Markets are filled with optimism now, but as the equity markets storm ahead, is there a dark ominous cloud of a recession looming in the background? Read More!

Berkeley Assets and Dubai Offshore Sailing Club (DOSC) are pleased to announce a new joint sponsorship. DOSC and Berkeley assets have forged this new partnership in order to build brand awareness from both sides, following the newly renovated DOSC clubhouse.

DOSC was established in 1974 as a result of the extreme generosity and support of His Highness Sheikh Rashid bin Saeed al Maktoum, Ruler of Dubai and Vice President of the UAE, who granted land along the coastline to the DOSC founders for the purpose of sailing.

Today, DOSC has excellent facilities enjoyed by over 700 members, a marina with 152 berths, a welcoming clubhouse and an immensely busy social calendar.

Omar Jackson, Partner at Berkeley Assets has comments - “We are extremely proud to sponsor DOSC, given its prowess and the sterling reputation it holds in the region. In many ways, DOSC and Berkeley Assets are cut from the same cloth, even though we are in entirely different industries. Through this partnership we are thrilled to enhance and further these synergies, working hand in hand with DOSC”.

DOSC had its first clubhouse built in June 1976, which rapidly gained a substantial member base due to the genuine passion for sailing throughout the Emirate. Recently, the clubhouse has undergone substantial renovations for its members.

Berkeley Assets already has an existing overlap between our clients and DOSC’s members, so the partnership will benefit everyone. With the up and coming launch of Novus by Berkeley Assets, a membership division that encompasses our retail sector, we are delighted to have entered into this partnership with DOSC.

Novus by Berkeley Assets will enable us to ensure that we continue providing an elite level of service to our existing and future clients, that remains unrivalled in this industry and many others.

DOSC and Berkeley Assets have forged this new partnership in order to build brand awareness from both sides, following the newly renovated DOSC clubhouse.

We have successfully completed the sale of our established blockchain technology and online currency platform, Cryptech. The landmark sale results in large benefits for the institutional and private clients involved in our firm’s blockchain VC arm. 

Berkeley Assets were approached with the offer, and the deal has been signed off and is expected to be finalised by the end of 2019. The buyer is a syndicate of VC firms, which we will announce in 2020. We have reaped substantial gains, as the sale has come at the perfect time with the company moving towards various new business ventures.  

We initially acquired Cryptech World, at a time when cryptocurrencies were only in their trial stages. While taking a risk in venturing into the innovative currency, over the years the Cryptech arm has performed well. It was Omar Jackson, Berkeley Assets Partner and Director of Cryptech, who was the driving force for acquiring Cryptech. He comments on the progress of the company leading to the sale:

“It’s a true success story for our clients involved. Through unrelenting due diligence, we were able to select and foster new to market concepts in a frontier technology, which has not only benefitted our investors, but also the blockchain companies that were seed funded. This has been a true testament to our hands-on management style to guide embryonic businesses through the challenges that face technology start-ups, in an ever more competitive industry.”

Private equity firm Berkeley Assets has acquired global investment and advisory service cryptech, a blockchain organisation.

2019 has been a tale of two stories for the private equity landscape. With an unprecedented $1.7 trillion USD in dry powder (unspent capital) in 2019, PE firms now have the task of deploying this capital. This conundrum has led to created trends in the industry including more niche investment strategies such as minority stake investments and raising long-hold funds.

With global PE firms all singing the same tune of 2020 US elections, US-China trade conflict, Brexit and China’s economic slowdown, most firms believe that the current geopolitical situation is of concern. However, one positive of this landmark equity market volatility is that deal opportunity for PE buyouts is at its highest. As valuations in public and private markets diverge, funds have identified arbitrage opportunities to drive deal activity.

With these high levels of dry powder, firms have seen three predominant trends emerge throughout 2019:-

Specialisation – Niche strategies have become more mainstream. In order to put unspent capital to work, firms have cornered smaller markets and have leveraged management skill to add value. 

Carve outs – Expectation for carve outs are at their highest, with the sell-off of business units needed to pay down debt. This follows a prolonged era of low-cost debt that has fuelled buyouts. Firms will now look to deleverage and reduce liabilities off their balance sheet.

Downward pressures on fees – PE investors are either urging firms to put their capital to work quickly or demanding lower fees. They are also angling for more direct co-investment in order to juice their profit shares and hold greater control over portfolios. Some of them are even purchasing equity stakes in the PE houses as a long-term play – creating “funds of firms”. 

Elevated competition for deals over the last three to four years has pushed pricing multiples to an ever higher 11.5x. As a result, finding acceptable assets with correct price tags has become harder. However, the unprecedented value of the public equity markets has allowed for these pricier assets to still be preferable in the face of unparalleled market volatility.

As a result of this elevated competition in the private markets, minority stake investment with quicker exits has begun to rear its head. Firms are following the mantra of “taking smaller slices of more pies”, by spreading risk across a less competitive pool of assets to keep pace with overpriced valuations. Firms are looking for quicker exit times with the median deal cycle reducing to 4.5 years.

Overall for Berkeley Assets, our deal cycle has remained consistent with greater emphasis on initial asset selection to identify undervalued opportunities; while remaining in a blend of shorter 12-24 months and medium 5-7-year deal cycles. 

2019 has been a tale of two stories for the private equity landscape. With an unprecedented $1.7 trillion USD in dry powder in 2019.

A Review 0f 2019 - Stories from Berkeley Assets this Year

Boris Johnson has said he hopes his party's "extraordinary" election win will bring "closure" to the Brexit debate and "let the healing begin". He said he would not ignore those who opposed Brexit as he builds with Europe a partnership "of sovereign equals".

The Tories have had a storming win with a Commons majority of 80, the party's largest since 1987. The Conservatives obliterated Labour in its traditional spots in the Midlands and the north of England, while holding off the Liberal Democrats in the south of England.

Speaking outside No 10, Mr Johnson thanked loyal Labour supporters who deserted Jeremy Corbyn's in droves, saying he would fulfil his pledge to take the UK out of the EU on 31st  January. Talks about a future trade and security relationship will begin almost immediately. 

UK stocks and the pound rocketed higher after Boris Johnson secured an election victory that clears the way for Britain to quickly leave the European Union.

The benchmark FTSE 100 gained 1.5% in early trading.

The FTSE 250 index of midsize British companies rallied more than 4%.

The pound strengthened nearly 2% to $1.34, its highest level since May 2018. 

While many FTSE 100 shares saw big gains, this was offset by the rise in the value of the pound, which naturally affects companies with foreign revenues. The FTSE 250 contains firms with more exposure to the domestic economy, so the gains were more pronounced.

The election also dashed Labour Party leader Jeremy Corbyn's hopes of transforming the UK economy through a spree of radical left-wing policies that scared the business community. He wanted the nationalisation of major utilities with tax rises for companies and higher earners.

Politically sensitive shares benefitted such as water company Severn Trent, which faced leftist nationalisation and rose 9%. UK housebuilders also saw large rallies, with Barratt and Persimmon up 14% and 12% respectively. Lloyds, Barclays and RBS were also up 5%, 6% and 8% respectively.

We believe, in the short term, this should be positive for business confidence. However, a lot can change over the coming months as the talks begin. If trade negotiations don’t pan out, the UK could still leave the EU without a deal at the end of 2020.

Whether the pound will hold its gains, is also a matter of hot debate. The UK is not out of the woods yet and future relationship uncertainty with the European Union may have some dampening effects as we pull into the New Year.

Boris Johnson has said he hopes his party's election win will bring closure to the Brexit debate and let the healing begin. 

Head of Corporate and Cultural Affairs, Hamad Al Qasim shares insights on work of the firm.

Corporate Social Responsibility (CSR) has become a standard practice for most businesses. Whether its supporting children’s education, protecting the environment, or aiding poverty issues, organisations are increasing their focus on social responsibility. Consumers and shareholders are more likely to have a positive image of a brand that is socially responsible.

Embracing CSR policies goes a long way towards attracting and retaining customers, which is essential for a company’s long-term success. More often than not, individuals will happily pay a higher amount knowing that part of the profits will be directed towards funding causes that they are sensitive towards. 

With the ever-growing competition and challenges companies face these days, there is a growing adoption of CSR initiatives within organisations to motivate employees. Incorporating CSR within the company empowers teams to leverage the corporate resources at their disposal to do good for their community, and eventually help impact the society at a larger scale. Alongside this, CSR within the workforce can boost employee morale and lead to greater productivity in the workforce.

Berkeley Assets is one such firm that believes that ‘charity starts at home’ and small initiatives introduced in-house can help the foundation of CSR. Leading the team as the Head of Corporate and Cultural Affairs and heading CSR initiatives of the firm, my aim is to move forward with a twofold approach of establishing associations with charity organisations and helping shape professionals. From crafting charity projects, managing team building activities, to helping employees develop their skills and achieve goals, the plan is to initiate CSR from within, so it is projected outwards.

His Highness Sheikh Khalifa Bin Zayed Al Nahyan declared 2019 as the Year of Tolerance, highlighting the UAE as a global capital for tolerance that embraces coexistence and cultures. The UAE’s Year of Tolerance is based on seven pillars, one of which is tolerance at workplaces which focuses on instilling the values of cohesive, safe and tolerant workplaces across the country. In line with the same ideology, besides offering employees a cohesive, safe and tolerant environment, Berkeley Assets builds and motivates each member of the team to achieve the best of their capabilities. The goal is to strengthen the team from the roots so that the initiatives within the team are reflected outwards on a larger scale, in the UAE, regionally, and potentially globally. 

The firm has already been activating CSR in the UAE, with the most recent project being the biggest iftar organised by a private company earlier this year, where we distributed meals to over 10,000 people with the help of the Dubai Police. Through such activities, Berkeley Assets creates an office culture which demonstrates the right mentality and encourages co-workers to do the best they can in the right direction.

Aside from supporting various causes like children’s education, fighting hunger, aiding effects of natural disasters and offering support to those in need of help, the firm is currently working with Action for Children in the United Kingdom, and several other charities internationally and locally. Berkeley Assets also encourage clients to be involved with CSR initiatives through a donation system that is built into contracts. 

Charity should never be compulsory, but at the same time, involving all stakeholders with causes that create a positive impact strengthens an organisation from its core and builds on its foundation. It is essential to involve team members and clients in CSR initiatives as it helps co-workers build a caring attitude towards one another and promotes a positive culture amongst employees. Clients also get sense a fulfilment from the opportunity to give back to the community, by getting involved with positive initiatives the organisation supports.

Berkeley Assets is one such firm that believes that charity starts at home and small initiatives introduced in-house can help the foundation of CSR.

Corporate Social Responsibility at Berkeley Assets

14 April 2015 - Launch of the Conservative Party Manifesto for the 2015 General Election commits to “hold an in-out referendum on our membership of the EU before the end of 2017”.

22 February 2016 - David Cameron announces the EU referendum date of 23 June 2016 after securing a deal on Britain's membership of the EU.

23 June 2016 - In a landmark referendum, the majority of those who voted chose to leave the European Union, voting 52 to 48.

13 July 2016 - The then home secretary Theresa May won the Conservative Party leadership contest by default, after all her challengers fell away.

29 March 2017 - Theresa May formally triggered Article 50 and began the two-year countdown to the UK formally leaving the EU (commonly known as ‘Brexit’).

8 June 2017 - After calling a snap election in a bid to increase her authority on Brexit in the Commons, May loses her parliamentary majority and has to make a deal with the Northern Irish DUP (Democratic Unionist Party) to stay in power.

8 December 2017 - The UK and the EU agree a deal on the UK’s so-called divorce bill, covering the Northern Irish “backstop”.

6 July 2018 -  After the European Union (Withdrawal) Bill becomes law at the end of June, May takes her cabinet to her country retreat Chequers in order to sign off a collective position for the rest of the Brexit negotiations with the EU. However, both Brexit Secretary David Davis and Foreign Secretary Boris Johnson both resign over the deal.

25 November 2018 - Following some enforced changes to May’s Chequers Plan by the EU, a new Withdrawal Agreement is published that contains a fleshed-out backstop which angers both the DUP and the Tory’s Brexiteers.
Under the deal agreed between May and Brussels, the backstop would keep the whole of the UK very closely aligned to EU customs rules, with some regulatory differences between Northern Ireland and the rest of the UK.

15 January 2019 - Having pulled the vote before Christmas over fears that she would lose, May attempted to get her deal ratified by Parliament. However, with Brexiteers worried about the UK remaining in the customs union through the backstop, and the DUP concerned about potential disparity between Northern Ireland the UK, the PM suffered the heaviest defeat in modern parliamentary history, losing 432 votes to 202.

12 March 2019 - Further legal assurances from the EU about the temporary nature of the backstop were not enough to quell Brexiteer rebellion, and May lost a second meaningful vote on her deal by 149 votes.

12 April 2019 - The UK’s EU membership is now extended to 31 October, with or without a deal. If a deal has not been agreed and ratified by then, the Government will face the choice of leaving without a deal, seeking more time, or even cancelling Brexit altogether.

7 June 2019 - After failing three times to get her withdrawal agreement through Parliament, Theresa May sets her resignation date.

24 July 2019 - Boris Johnson enters Downing Street after winning the Conservative party leadership election with 66% of the vote, a comfortable victory over rival Jeremy Hunt.

28 August 2019 - The new PM asks the Queen to suspend Parliament for five weeks in the run-up to 31 October. Johnson claimed the prorogation was a routine move intended to pave for the way a Queen’s speech on 14 October setting out his government’s new legislative programme, but most people agree that the prorogation was scheduled to give MPs less time to try to block no-deal before the 31 October deadline.

4 September 2019 - MPs back a bill blocking a 31 October no-deal Brexit (“Benn Act”). Their victory means that Johnson will have to ask for a Brexit extension beyond the 31 October Brexit deadline if he can’t secure a deal with the EU. The PM - who has called the 31 October deadline “do or die” - reacted by calling for a snap general election.
Opposition parties collectively refused to back a general election vote until the legislation blocking a no-deal exit on Halloween has passed into law and the EU has agreed the extension.

24 September 2019 - The UK Supreme Court rules that Boris Johnson’s five-week prorogation of Parliament in the run-up to the Brexit deadline is “unlawful”. Business returns to normal.

2 October 2019 - The PM makes a formal proposal to the EU setting out his alternative to the Irish backstop. The proposals would leave the UK in the same customs territory as the EU and would keep Northern Ireland under EU regulations until a permanent trade deal was reached.

6 October 2019 - Following a phone call between Johnson and Angela Merkel, the German chancellor insisted that “the UK cannot leave without leaving Northern Ireland behind in a customs union and in full alignment forever” - a situation that would never be acceptable to the EU and that means a deal is “essentially impossible not just now but ever”.

19 October 2019 - Johnson is legally obliged by the ‘Benn Act’ to send a letter to the EU on that date requesting a three-month Brexit extension if Parliament doesn’t pass a deal or vote for no-deal.

25 October 2019 – The EU have agreed to grant Britain's request for another extension to the Brexit deadline but have yet to decide on the length of the new delay (“flextension”). 

The key events, cases and developments that led to the United Kingdom exiting the European Union. 

A hard Brexit involves a deal whereby the UK not only severs ties with the EU, but the customs union and single market. With no precedent set for a country leaving the EU, speculation as to the exact divorce terms is rife.

Ultimately, the UK will have to pay a withdrawal cost for departing from the EU, but this will allow the UK to sign independent free-trade deals with no restriction. Current views are that the UK may adopt the current relationship that Canada has with the EU. However, there are significantly more complicated ties that the UK currently has with the EU. For example, the “passporting” of UK financial services into the EU will require detailed analysis. 

What does a hard Brexit mean for the UK economy?

Defining a financial cost for a hard Brexit is merely an estimate, because of the unprecedented move. 

Leaving the advantages of EU membership behind and switching to WTO trade rules is estimated to cost the UK's businesses about £65.5 billion per year. Analysts postulate that the UK will find it difficult to replace the lost trade revenues from the EU. About 44% (or £220 billion of £510 billion) of the UK's exports currently go to EU countries.

Our Blog