Asset managers, wealth managers and family offices re-evaluating exit strategies in light of the current interest rate environment

• Ocorian research finds almost all asset managers, wealth managers and family offices interviewed in our survey have changed their plans in some way
• However, this isn’t the only factor having an impact on company/asset valuations

Exits

Almost all (96%) asset managers working in alternative investments, senior executives at major companies, family offices and wealth managers, are adjusting their exit strategies in response to the current interest rate environment, according to new global research* from Ocorian, the specialist global provider of services to financial institutions, asset managers, corporates and high net worth individuals.

Ocorian’s global research, carried out among asset managers working in alternative investments, senior executives at major companies, family offices and wealth managers, shows that almost six in ten (59%) are anticipating bringing forward exits in response to the current environment with just one in five (20%) having extended them and over a third (36%) having had to redesign or reevaluate them. 

Charlotte Cruickshank, Global Head of Fund Onboarding and Solutions at Ocorian commented: “In today’s economic climate, where interest rates have seen significant adjustments after years of near-zero rates, the industry is navigating a complex exit landscape. As with 59% of our survey responses, exits have been brought forward as the cost of debt has soared, reducing the company’s free cash flow and profitability. The higher cost of capital has also muted enthusiasm for leveraged purchases, leading managers to hold on to assets for longer, waiting for more favourable market conditions or looking for alternative exit strategies”

Valuations

When specifically asking asset managers working across private equity, venture capital, real estate, infrastructure and private debt how the current interest rates have impacted their company and asset valuations, almost all (95%) say they’ve had an impact, with 40% of these saying current interest rates have had a significant impact. 

Charlotte Cruickshank, Global Head of Fund Onboarding and Solutions at Ocorian added: “As expected, our research shows that interest rates are having an impact on company valuations, however there are other factors also at play including change in political leadership and geopolitical issues.”

(95%) say that changing political leadership in their home country has had an impact on their company and asset valuations, with 60% of these saying this change has had a significant impact. 

Other major issues listed by asset managers as currently impacting their company and asset valuations are rising and falling risk premiums (95%), geopolitical issues (92%) and falling inflation (81%).

Despite this, none of the asset managers questioned said their organisation’s current valuation cycle would negatively impact their fundraising efforts. Instead, they generally have a more positive outlook. Almost seven in 10 (69%) said that their organisation’s current valuation cycle will have a positive impact on their fundraising efforts, including 7% saying it would be very positive. Around a third (32%) said it would have a neutral impact.

Charlotte Cruickshank, Global Head of Fund Onboarding and Solutions at Ocorian remarked: “We’re encouraged by the positive sentiment, clearly even in uncertain economic times, there are opportunities to navigate these waters effectively.” 

Ocorian is a global leader in fund administration, capital markets, corporate and fiduciary services. Ocorian helps its clients solve complex problems so they can optimise investment performance and build their competitive advantage.

*Ocorian commissioned independent research company PureProfile to conduct a global study of 300 senior executives. The survey was carried out among asset managers working in private equity, venture capital, real estate, infrastructure or private debt board directors or senior executives of private or publicly listed companies with a minimum annual revenue of $10 million, companies operating in capital markets, wealth managers, family offices and professional services providers such as legal counsel working for alternative asset managers, large listed or unlisted corporates, family offices, wealth managers and capital markets professionals.  The survey was conducted in October 2024 in Canada, France, Germany, Hong Kong, Ireland, Norway, Saudi Arabia, Singapore, South Africa, Spain, UAE, UK, US, Bahrain, Denmark, Italy, Kuwait, Portugal and Switzerland.