Novo Holdings anticipates intensifying demand for private assets
Novo Holdings, the investment company of the Novo Nordisk Foundation, expects retail investors to drive a meaningful part of private capital industry growth (Novo Nordisk)
As UK asset owners - especially pensions - ponder the prospect of having to invest greater amounts in private assets, it bears thinking how growing interest in this sector will change it.
For this, it might be worth hearing from an asset owner that already invests significant sums in private assets. We recently happened to discuss the topic with Novo Holdings, the investment company of the Novo Nordisk Foundation, one of the world’s largest charitable foundations, which has $148bn in assets and a 47 per cent allocation to private equity.
Of course, increased demand for private assets may well push up their price and therefore push down returns - assuming supply stays static, but that may not be the case, as Christoffer Søderberg, managing partner for principal investments at Novo Holdings, suggests.
He said he expects the private capital industry to continue to grow, with retail investors driving a meaningful part of that.
Søderberg said: “Consequently, we expect even more companies to become or remain privately owned, and the competition for attractive private assets will continue to intensify.
“Private markets will as a result continue to gradually become more efficient and also more liquid and transparent.
“Importantly, specialisation and differentiation will become increasingly key and a requirement to generate alpha.”
Søderberg said he also expects the private capital industry to become more consolidated with the big players getting bigger and the smaller players becoming increasingly specialised.
He said: “We do not foresee our exposure to private assets changing as a result of these market dynamics — but it requires us to continuously be on our toes and focus on leveraging our edge as investors.”
Søderberg also touched on the issue of investing in healthcare - which Novo Holdings does a lot of, understandably, given its wealth stems from a pharmaceutical company - an issue which AOX looked into recently.
He remains bullish about this sector.
Søderberg said: “We continue to believe that healthcare and life sciences are sectors exposed to attractive structural growth drivers, making them fundamentally attractive areas to invest in.
“These drivers include demographic shifts such as ageing populations, the rise in GDP per capita in lower-income regions, the increased adoption of digital and data infrastructure and AI enablement, and what we still see as a golden era of innovation, with extraordinary scientific and technological breakthroughs — something that will be further accelerated by the wider use of AI and, in time, the prospects of quantum computing.”
