‘You’re getting married’: Fund managers urge deep due diligence in private markets

InvestorDaily

Entering the unlisted asset space is akin to getting married, according to John Woods, deputy chief investment officer (CIO) and head of multi-asset at Australian Ethical. Speaking on a recent Morningstar webinar, Woods emphasised that due diligence challenges in the private market are significantly more demanding than those in public markets. “When you make a private investment, you can’t change your mind tomorrow – you may not be able to change your mind for 10 years. You’ve got to consider a much longer time horizon when making that decision,” he said.

“Our process of appointing managers and making those decisions reflects that. We go quite deep and we worry more about some of the minor things.” While stopping short of hiring private investigators to trail CEOs, Woods noted that some private equity firms do undertake that level of due diligence for major transactions. “It’s a very different space, you’re getting married and I think that’s the way you should look at making these decisions.”

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