David Bellamy, chief execitive of FTSE 100 wealth management behemoth St James's Place, has revealed the company is preparing to offer clients private equity exposure in their portfolios.
Mr Bellamy said the "onerous" level of regulation of listed companies has increased the desire for company founders to avoid listing on a stock exchange, and instead raise capital though partnerships with private equity firms.
Traditionally private equity as an asset class has not been available to most private investors as the minimum investment level required is too large for most individuals. Mr Bellamy said private equity is likely to be suitable for most investors with a "balanced portfolio."
Speaking at the Personal Investment Management and Financial Advice Association conference in London today (8 November), he said a key problem with trying to offer private equity investments to advised clients is the lack of liquidity of such holdings.
With that in mind the chief executive said he is working to find a way to "unitise", that is, create individual units of a private equity investment, similar to the units created by open-ended equity funds.
This would allow each unit to be priced at launch at a level where the minimum investment could be within the aspirations of the private investor.
Such units would then be more liquid than the shares of the underlying companies.
Mr Bellamy said it is "beholden" on the investment industry to continue to lobby the government and other policy makers to prevent regulatory pressures from restricting the appetite of companies to list on public markets.
He said the number of companies listed on the UK market has fallen from over 3,000 to over 2,000 in recent years.
There has been increased interest in private equity and investing in unquoted companies from other parts of the industry in recent years.
The fund managers Neil Woodford, who runs the £8.4bn Woodford Equity Income fund, and James Anderson, who runs the £6.3bn Scottish Mortgage investment trust have long held investments in unquoted companies.
There are also several investment trusts listed on the London Stock Exchange, that invest in private equity and, as listed vehicles themselves, offer liquidity for private investors.
David.Thorpe@ft.com
