Quarterly Round Up

BERKELEY INSIGHTSCOVID REACTIONMARKET UPDATESOUR COMPANY
ISSUE 2 - Q2 2020

BERKELEY INSIGHTS

VIRTUAL REALITY

Innovation is one of our guiding principles at Berkeley Assets and drives us every day to develop new ways to engage with our clients. Early on, we recognised the potential of virtual reality (VR). This has allowed us to be one of the first within the private equity arena to make this state-of-the-art technology available to our stakeholders. We are excited for our clients to experience it soon at our offices worldwide.

VR offers a high level of engagement and delivers an enhanced viewing experience. Valuing the immersive nature that VR technology creates, it allows our clients to visualise Berkeley Assets’ world.

We take both our institutional and private clients on a virtual tour through our business operations. Our VR gives them the chance to visit completed and current projects while offering an engaging experience without external distractions. It also allows us to provide a consistent experience and message to clients and partners visiting our offices throughout the world.

Team Debates

Since restrictions have been eased and our team is back at the office, we are eager to resume with our staff training program. Starting off with a new chapter of our in-office program, we are aiming to strengthen the communicative skills of every one of our staff, through team debates. This sees Partners debating with senior and junior colleagues alike. 

Engaging in debates has been proven to be extremely beneficial for the development of numerous skills. The power of deploying rational arguments and compelling evidence in a debate enables our staff to enhance their skills of researching, organizing, and expressing their ideas eloquently while presenting information in a compelling fashion. 

Our training activities also encourage teamwork and help us to continue building and strengthening our infamous company culture. This is crucial to Berkeley Assets in order to ensure that processes run seamlessly across all our global offices while maintaining a content and loyal team representing the brand ethos with passion and delivering the results expected by our stakeholders.

Recruiting During COVID-19

The COVID-19 driven economic downturn has forced many companies to reduce headcount. At Berkeley Assets we value each of our loyal team members with staff retention being our primary aim. We are proud to repay their loyalty and we have not had to lose a single member of our team even in these unprecedented times. We are actually pleased to be in a position that enables us to increase headcount and to hire new talent, as we expand into new territories.

Following video and telephone interviews due to social distancing measures, successful candidates were invited to the office. They had to complete various rigorous assessment days followed by face-to-face interviews in order to complete the interview process. 

In line with several women empowerment initiatives that we established to attract and retain talented women, we are glad to announce that we hired a new female team member, joining the company as a Brand and Marketing Manager.

COVID REACTION

Social Sustainability

In line with our Corporate Social Responsibility (CSR) values as well as the personal desire of our UAE Partner to help those in need, we are proud to share that our UAE Partner, Omar Jackson, supplied a financially strained orphanage with food and all necessary supplies during the COVID-19 lockdown in Sri Lanka.

Providing valuable contributions to communities around the world has always played an important role in Omar’s life. An unplanned visit to the Vajira Sri Children’s Development Centre, who he previously financially supported to renovate the school and accommodation, had touched his heart.

The main problem that the Vajira Sri Children’s Development Centre was facing was lack of regular food supplies. The situation was particularly tough during the COVID-19 lockdown when borders were fully closed and regular donors were financially affected and thus couldn’t support the orphanage. This led to shortages in supplies leaving children with only one meal per day. The generous donations of our UAE Partner made it possible to provide 3 meals daily for 200 children over a time span of 6 weeks.

UK FCA Advisory Business

At Berkeley Assets, we pride ourselves on conservative tangible asset-backed businesses in order to generate sustainable yields for our clients and shield their capital from volatility. However, through our extensive institutional network, we often are presented with clients that are searching for more risk-on approaches.

To support these institutional clients and further foster our relationships we are launching a UK FCA regulated placement advisory business. This business will be anchored by our existing institutional relationships to advise institutions where their capital would best be placed if they are seeking alternative asset exposure.

This advisory unit will form a separate business line to supplement our global expansion.

Institutional Fund Launch

Currently in the late finalisation stage, the Berkeley Assets Development Fund is planned to be launched in Q3 2020. As our first fund, we are delighted with pre-commitments already being achieved towards this first small fund raise of 50M GBP.

For our tenure, we have always favoured direct placements into projects for efficiency and cost purposes, rather than fund structures. However, the decision to launch our first pooled fund structure arose to satisfy an increased demand for opportunities in the private equity real estate sector from new institutional interest.

Market dislocations that will be seen over the next 12-24 months will be one of the focuses of this fund, mainly being driven by our current MENA and APAC based institutions.

MARKET UPDATES

COVID-19 Impact on the PRIVATE EQUITY Industry

Despite a strong initial start to the year, research confirmed the lowest level of private equity deal volume since the global financial crisis in 2009. While the UK is remaining Europe’s largest PE market (by value) it has been estimated that 80% of the total 64 recorded deals from H1 were actually made in Q1, leaving Q2 as the worst quarter of the year so far.

Naturally, in a period of economic decline exit activity has dropped even more significantly and the industry is expected to shift towards buying mode. Carrying a record of $2.5 trillion in uncalled capital (dry powder) suggests that funds won’t sit still for too long. This amount of substantial capital will most likely be put to work in two ways. Providing liquidity to businesses struggling with cashflow due to economic distress and to provide financing for new deals.

Global Markets: An overview

Due to the nature of such an unprecedented healthcare crisis, it is still uncertain how much damage COVID-19 will have on the global economy. Unknown timelines raised worries of unpredictable effects on consumer behaviour and business activities. 

The global economy has taken a huge hit from the pandemic being one of the largest declines in global GDP of the last century. Other large declines were caused by WW1, WW2 and the Great Depression of the 1930’s. The current recession triggered by the coronavirus outbreak is expected to be deeper than the one that followed the global financial crisis in 2008. 

Despite recent positive market activity, and in some cases new market highs, we should not be fooled. Record levels of fiscal stimuli to support the global economy are likely to be short-term phenomena with questionable long-term effects. Thus, the full real fallout is still very unclear and a warning sign for anyone feeling too bullish on the markets.

OUR COMPANY

Global Growth: Expansion into Africa

Following our expansion into APAC and Latin America last year, we have continued our global growth strategy. We are actively working on the next geographical expansion to extend our reach into Africa. We see great opportunities in this region due to positive wealth statistics supported by a growing number of HNWIs and regional institutions. The total wealth held in Africa has risen by 14% over the past 10 years (2009 to 2019) while private wealth is expected to rise by 35% until 2028. 

We are currently focusing particularly on Nigeria, Kenya, and Mauritius, with Mauritius being the top performing individual market in terms of wealth growth over the past decade. We have used the past months efficiently to build relations with local introducers, including family offices and private bankers in order to analyse the landscape and opportunities these new territories will provide. 

With the estimation that the African wealth management market will grow by around 7% per annum over the next 10 years, Africa is a promising territory for our global expansion strategy. We look forward to exploring these opportunities further and to continue building and deepening relations within this region once travel restrictions are eased.

Latest Projects: Post-COVID Investment Strategy

During the current and short-term future market situation, we have a clear focus on identifying opportunities from market dislocations. We plan to deploy capital into new projects over the next 6-12 months. Favourable credit positions with equity conversions are expected as distressed vendors are in need of liquidity as natural consequence of the current market situation. 

However, stern due diligence and more drastic downside cases will have to be modelled to provide ultimate comfort, while maintaining our ethical approach to asset selection. As we expect asset devaluations to continue for no longer than the next 12-18 months, we will maximise the opportunities in the given market situation at the right time and act when opportunities present themselves.

Partnerships: DOSC Back in Action

After tying the knot with Dubai Offshore Sailing Club (DOSC) at the beginning of the year, COVID-19 and the lockdown prematurely brought the annual calendar to a halt and forced all water sports to be paused. However, this hiatus was ended by an exciting and thrilling first post-lockdown race on June 19th. 

Two of our Berkeley Assets staff did not want to miss out on this opportunity and attended the race. We are glad to have DOSC back in action and are looking forward to initiating the start of our summer soirees at the club.

Previous Round-Ups
ISSUE 1 - Q1 2020
Offshore - Multi-Asset Private Equity Firm of the Year, Berkeley Assets
Young CEO of the Year Award 2019
Achieving Women’s Award in the Private Equity Sector 2019
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Offshore - Multi-Asset Private Equity Firm of the Year, Berkeley Assets
Young CEO of the Year Award 2019
Achieving Women’s Award in the Private Equity Sector 2019