Willis Towers Watson launches working group to explore "new breed" of investment manager

Rhea-AI Summary

Willis Towers Watson has launched a dedicated working group to explore a new breed of investment management firm that will invest across the entire equity spectrum. Established in March 2021, this team will assess public and private equity opportunities. A recent paper highlights the need for private equity to evolve its investment structures to attract a broader investor base. The group also emphasizes improving ESG standards among private equity managers, advocating for new frameworks to enhance reporting on carbon emissions as a step toward net zero.

Positive

• None.

Negative

• The current model in private equity has not evolved significantly over the decades, potentially limiting growth opportunities.
• There may be pressure on private equity managers to prematurely sell investments due to existing fund structures, affecting long-term strategies.

ARLINGTON, Va., May 05, 2021 (GLOBE NEWSWIRE) -- Willis Towers Watson has launched a dedicated working group that brings together expertise from both its public and private equity investment research teams, to assess the potential for what it calls a “new breed” of investment management firm that invests across the entire equity spectrum.

The working group, which was established in March 2021, will actively evaluate opportunities in the public/private equity space.

In its recent paper, titled “Institutional allocation to private equity,” Willis Towers Watson has shown that while there are strong structural tailwinds to support the continuing rise of private equity in institutional portfolios, the private equity industry itself needs to evolve more actively the way in which it structures its investments in order to fully capture the growth potential.

One of the focus areas for Willis Towers Watson’s working group is the potential for a new type of passive, or beta, offering within private equity that allows asset owners to access and hold these investments in a cost-effective way. Since many private businesses are already well established with strong management in place and strong cash flows, the working group believes those businesses are well positioned to compound earnings over a longer time horizon than current structures allow.

Furthermore, Willis Towers Watson is challenging private equity managers to take additional steps to improve their environmental, social and governance (ESG) standards. As part of this effort, it has developed a set of guiding principles to help them formulate their own frameworks, including assisting them to report on the carbon emissions being generated by their investments as a first step on a route toward net zero.

“What we currently have within the private equity space is a model that hasn’t changed in the past few decades,” said Andrew Brown, head of Private Equity Research at Willis Towers Watson. “While that structure has performed well over this period, we are increasingly seeing capital moving away from defined benefit pension schemes into defined contribution, so there is a need to innovate in order to identify a structure that enables a wider investor base to access opportunities.

“This could mean relooking entirely at the way that some private equity funds are structured. For example, specific fund terms can mean that private equity managers may be under pressure to sell out of investments prematurely in order to facilitate further fundraising, whereas long-dated funds and evergreen structures could be a way of mitigating the need to do so. This could facilitate the creation of a form of ‘buy and maintain’ private equity that may better suit an investor with a longer-term investment horizon.”

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

Media contact

Ileana Feoli: +1 212 309 5504
ileana.feoli@willistowerswatson.com

FAQ

What is the new investment management initiative launched by Willis Towers Watson in May 2021?

Willis Towers Watson launched a working group to explore a new type of investment management firm that focuses on investing across the entire equity spectrum.

How does Willis Towers Watson plan to innovate in private equity investments?

The firm aims to develop new structures for private equity investments that provide a more sustainable model, potentially allowing for longer holding periods.

What emphasis does Willis Towers Watson place on ESG in private equity?

The company encourages private equity managers to enhance their ESG practices, including improved reporting on carbon emissions.

When was the Willis Towers Watson working group established?

The working group was established in March 2021.

What are the challenges faced by private equity according to Willis Towers Watson?

The firm notes that the existing private equity model has not seen significant changes for decades, prompting a need for innovation to attract a wider investor base.