abrdn Global Private Markets Fund

The abrdn Global Private Markets Fund (GBP Acc) aims to build a well diversified portfolio of Private Equity, Private Credit, Real Estate, Infrastructure and Natural Resources. 

Launched in 2018, the abrdn Global Private Markets Fund was originally designed for pension funds and other large institutional investors seeking broad private markets exposure. It is now available to experienced private investors for the first time, exclusively through Wealth Club, for a minimum investment of £26,000.

The fund targets an annualised return of 9-12% – not guaranteed. Since launch in January 2018, it has grown to £325 million of assets (December 2023) and achieved an annualised return of 7.8% (February 2024) – past performance is not a guide to the future.

Unlike most private market funds, the abrdn Global Private Markets Fund has a semi-liquid structure that’s simpler, more flexible and more liquid than normally associated with private market funds. Investors can make a lump sum investment and get exposure to the whole existing portfolio from the start; they can also request redemptions once a quarter – although a long-term investment horizon is still encouraged. 

• Quarterly opportunities for subscriptions and redemptions
  
• Minimum investment: £26,000 – you can apply online
• Next subscription deadline: 28 August 2024 (5pm, cleared funds)

The manager

abrdn was created by the merger of Standard Life and Aberdeen Asset Management. The combined group is one of the UK’s largest investment houses, with around £500 billion assets under management and administration, and a market capitalisation of £3.3 billion (December 2023). 

The Global Private Markets Fund is managed by a core team of 13 investment professionals, five focused on portfolio construction and eight on idea generation and implementation, led by Nalaka De Silva. Nalaka has been at abrdn since 2012, establishing the Private Market Solutions team in 2017, and has been in the industry since 2004. The members of the team bring a diverse range of expertise, from venture capital specialists to direct real estate investment experts. 

The core team is also able to draw on expertise from the 250 dedicated private markets professionals across the wider abrdn group. The group manages £60 billion of private market assets, with offices in 15 locations around the world (December 2023). That allows the fund to source a wide range of potential third-party investments as well as access abrdn’s own range of institutionally focussed private equity, real estate and infrastructure funds – helping the manager quickly deploy investor capital.

Investment strategy

The Global Private Markets Fund aims to provide investors with exposure to a broad range of global private markets. That includes Private Equity, Private Credit, Real Estate, Infrastructure and Natural Resources. Across each segment, the fund has a broad exposure, with Private Equity investments (for example) ranging from venture through growth to large company buyouts. The fund can include a mixture of primary and secondary fund investments as well as direct co-investments.

abrdn’s Private Markets House View dictates the amount the fund will invest in each asset class. The view is developed by its macro research, origination and private markets leadership teams from across the abrdn group. 

Long-term strategic asset allocation

The resulting strategic asset allocation sets the parameters within which the team will build the portfolio, seeking to identify the top-performing managers and opportunities.

The team draws on abrdn’s strong network, which includes 1,000+ primary fund commitments and 400+ advisory board seats. That scale helps give the manager access to market-leading funds alongside proprietary direct and co-investment deal flow.

The fund actively manages the liquid portion of its portfolio in such a way as to reduce cash drag and allow it to meet future redemptions. It invests in a basket of well known public indices to match its intended exposure to each asset class. This is combined with a hedge product to reduce the volatility inherent in public markets. This should maintain a pool of liquid assets while generating a return but with less volatility than public markets.

The fund targets an annualised return of 9-12% – not guaranteed.

Portfolio

The fund currently has £325 million of assets under management and is well diversified, with over 600 underlying investments. It has a bias towards North America (42.3%) and Europe (42.2%) with a smaller portion invested in the Asia Pacific (13.3%) and Latin American (2.1%) regions (December 2023). 

The top 10 investments account for 59.3% of fund assets – this includes a £71.2 million (21.9%) investment in Standard Life Capital Infrastructure I, a diversified infrastructure fund, detailed below. 

The fund currently holds 12.1% of its assets in cash (December 2023). The long-term target is to hold 9% of assets in cash.

The graphs below show the portfolio diversification across asset classes, investment type and region as at 31 December 2023:

Examples of portfolio holdings by asset type

Venture Capital – US Venture I/Roblox 

US Venture I is a leading Silicon Valley venture capital firm which has a confidentiality agreement with investors. It was an early investor in a host of other Silicon Valley unicorns, including Twitter, Facebook and Airbnb. GPMF committed $15 million to US Venture Fund I in 2019. 

Fund I’s investments include online gaming platform Roblox, which enables users to develop and interact across a variety of games on a single platform. In the second quarter of 2023, it reported 65.5 million daily active users and 14 billion hours engaged.

US Venture I invested in Roblox in 2020 at a $4 billion valuation. The company went on to list on the New York Stock Exchange (NYSE: RBLX) in March 2021, with an initial market capitalisation of $40 billion. The fund has since realised its entire investment in the company, with GPMF’s proceeds from this deal alone exceeding its entire commitment to the US Venture I fund. Past performance is not a guide to the future. The remaining US Venture I stake accounts for 4.8% of GPMF’s net assets (December 2023).

Infrastructure – Rock Rail East Anglia Stadler Fleet 

Rock Rail East Anglia is a rolling stock leasing company – buying 58 electric and bi-mode trains for the East Anglia rail franchise. The trains, which include 378 carriages, are expected to operate on routes including between London and Norwich, Stansted Express services from Liverpool Street and other regional services in East Anglia. 

The manager believes railway rolling stock is an attractive sector, with robust demand and potential for long-term compounding. 

The investment was made through the fund’s investment in SL Capital Infrastructure Fund I, a £516 million fund which includes other infrastructure investments such as hydropower, gas distribution in Norway and Finland, and liquid bulk storage serving London’s airports. SL Capital Infrastructure Fund I has delivered an 9.3% p.a. return for GPMF since investment. Past performance is not a guide to the future.

SL Capital Infrastructure Fund I is the abrdn Global Private Markets Fund’s largest holding at 21.9% of net assets (December 2023).

Private Equity Co-Investment – Action

Action is one of the largest and fastest-growing discount retailers in Europe. The company has more than 2,500 stores across southern, western, and central Europe, serving over 15 million customers each week.

In 2022, Action reported sales of €8.9 billion, up 30% year-on-year. That was driven in part by new store openings, although like-for-like sales still grew 18%, partly thanks to easing of Covid restrictions. Operating profits rose 46%.

The abrdn Global Private Markets Fund invested in the company directly in 2019 as a co-investment alongside 3i. The fund exited part of its position in Q2 2023, realising £17.3 million and booking a 2.9x return. The fund continues to hold a £10.1 million position equating to 3.1% of the fund (December 2023). Past performance is not a guide to the future.

Private Credit – Dott

Dott operates rentable e-scooter and e-bike networks across seven European countries and Israel. Its fleet includes 40,000 scooters and 10,000 e-bikes, and it has won two of the world’s biggest micro-mobility tenders in London and Rome. 

The abrdn Global Private Markets Fund provided €10 million of private credit to the company in March 2023 to help it continue its expansion. The team believes the micro-mobility market will continue to grow as cities seek to encourage the shift from cars to more sustainable transport.

Dott had previously received funding from abrdn’s private equity business as part of its $150 million Series B funding round in February 2022. The same round attracted follow-on funding from existing investors Sofina, EQT Ventures and Prosus Ventures.

The investment is a 3.1% position within the Global Private Markets Fund (December 2023).

Real Estate – Forest Logistics

Forest Logistics is a Chinese operating and property company which manages modern logistics facilities, including cold storage facilities. 

China’s logistics sector benefits from some attractive supply and demand characteristics, with a fifth of the per-capita logistics space available in the US and growing demand. Online sales are expected to triple over the next ten years, and a shift in focus from growth to profitability among Chinese businesses is expected to favour more sophisticated logistic infrastructure.

Forest Logistics is targeting a portfolio of 25-30 high-quality, modern logistics assets spread across the country.

The abrdn Global Private Markets Fund co-invested in the business alongside BPEA EQT Real Estate. The holding accounts for 2.0% of the abrdn Global Private Markets Fund’s net assets (December 2023).

Examples of previous exits and failures

The abrdn Global Private Markets Fund has yet to report any complete exits, reflecting the long investment periods associated with investing in private market assets. There have been no failures within the portfolio to date, although these are to be expected.

Performance

The fund launched in January 2018 – its track record is shown below. The fund is currently performing a touch below its stated target return of 9-12% per annum. Please note, past performance is not a guide to the future.

The fund’s private equity investments have been the key drivers of performance, with both co-investments and fund investments delivering returns.

abrdn Global Private Markets Fund – Performance since inception

Tax treatment

There are no tax reliefs associated with this investment. 

abrdn intends to generate the bulk of any returns from the fund via capital growth. For UK taxpayers, any realised gains from the fund should be subject to Capital Gains Tax. Any income generated by the fund (whether distributed or not) will, however, be subject to income tax. abrdn aims to publish the amount of income earned within the fund within six months of its annual reporting period. This should then be reported on your self-assessment return.

Remember, tax rules can change and tax benefits depend on your circumstances.

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

Private equity investments are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. 

Investments in private equity are sensitive to changes in the global economic outlook. An economic slowdown or drop in investor confidence is likely to have an impact on the value of private market investments. 

Private equity investments are long-term and should not be considered as readily realisable. The fund invests in companies or instruments which are denominated in currencies other than the fund’s respective currency – such investments are exposed to currency fluctuations.

Unlisted investments can be difficult to price and value. Certain investments are valued based on estimated prices and therefore subject to potentially greater pricing uncertainties than listed securities.

Redemptions are available on a quarterly basis, however, net redemptions may be limited to 5% of NAV, to manage liquidity in the fund. The manager reserves the right to charge a redemption fee in periods of market stress.

Before investing, you must be an elective professional client of Wealth Club. You must be able to understand the fund’s strategy, characteristics, and liquidity profile. You must also be comfortable with the potential for periods of illiquidity.

Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Charges 

A summary of the main charges for the fund is shown below: please note, any underlying investments may have additional charges. These will not be paid directly by you but will have an impact on returns. Wealth Club investors will invest using a nominee structure. This service is provided by Wealth Club’s subsidiary companies Wealth Club Asset Management Limited (authorised and regulated by the FCA) and Wealth Club Nominees Limited and is governed by the Terms and Conditions of the Wealth Club Services. Please refer to the schedule of Wealth Club charges for more detail on fees paid by investors to Wealth Club, the Investment Documentation and Key Information Document for more details on charges.

Deadlines and dealing process 

The fund accepts investor subscriptions and redemptions once per quarter. Wealth Club is unable to accept tax residents of the Republic of Ireland into this Fund.

Subscriptions

The next subscription deadline is 28 August 2024 (5pm, cleared funds) to meet the next dealing date.

Settlement will take place 25 business days after the dealing date (the dealing date is the first business day of February, May, August and November).

Redemptions 

Investors can request redemptions once per quarter. The deadline for redemptions is on the same day as subscriptions. Settlement occurs 25 business days after quarter end. 

Investors will be able to submit redemption instructions by using the Wealth Club secure message portal. 

5% of NAV net redemption cap 

Net redemptions (redemption requests received within a given quarter minus subscriptions received over that same quarter) will be limited to 5% of the fund’s Net Asset Value as at the relevant calculation day at the end of the preceding quarter. 

If redemptions are above 5%, these will be processed on a pro-rata basis. Investors will be informed of any redemption amount not processed on the relevant settlement date. Any redemption amount not processed on any dealing day will be deferred until the next dealing day unless cancelled by the investor.

Our view

The Global Private Markets Fund aims to draw on the knowledge, experience and scale of abrdn’s private equity, private credit, infrastructure and real estate research teams to provide investors with a well diversified portfolio of private market assets. 

Since inception, the fund has generally performed well but delivered returns a touch below its stated return objective of 9-12% per annum – past performance is not a guide to the future. 

At present, the fund is weighted towards private equity and has a significant allocation to venture capital which has to date performed well. This may appeal to more adventurous investors, but the fund is expected to increase its weighting towards credit and real estate over time.

The quarterly dealing nature of the fund makes this a more liquid structure than many private market funds – although investors should note the redemptions are capped at 5% of the fund’s net asset value per quarter. Investors should be prepared to hold the fund for the long term.

We note abrdn’s sale of its private equity business, which has the potential to reduce the fund’s access to co-investments. However, the management team confirmed in a recent meeting that they don't believe this will have a lasting impact on their ability to deliver the investment strategy. The fund invests across a range of private asset classes, while nearly two thirds of existing private equity investments are managed by teams from outside abrdn. 

In early 2024, abrdn reduced the annual management charge on the fund to 0.55%, until the fund reaches £500 million in assets. In our view it is encouraging to see abrdn investing in growing the size of the fund.

The abrdn Global Private Markets Fund is competitively priced and could be a good initial building block for investors looking to construct a private market portfolio – you should form your own view.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.