KENDRIS Capital urges focus on private-market investment capabilities

Nicosia, Cyprus. Investors should focus on whether they have the expertise and infrastructure to manage private-market investments rather than on choosing between funds, direct investments and co-investments, according to Nikolas Charalambous, managing director of KENDRIS Capital Limited.

Writing for the Cyprus Investment Funds Association (CIFA), Charalambous said wider access to private markets had led entrepreneurs, family offices and institutional investors to reconsider whether professionally managed funds remained the preferred route to exposure.

Investment structures

Charalambous said he regularly encountered the question of why investors should use a fund rather than invest directly or participate in co-investments.

Direct investments can appear attractive because they offer greater control, potentially lower fees and the ability to determine where capital is deployed, he said.

Co-investments have also increased this appeal by enabling investors to participate alongside established fund managers, often at lower fees than traditional fund structures.

Institutional capability

Charalambous said the comparison between funds, direct investments and co-investments overlooked the capabilities needed to execute an investment successfully over a long period.

“The real comparison is therefore not between funds and direct investments, but between institutional investment capability and individual investment capability,” he said.

Private-market investments require more than identifying an attractive opportunity, he said. Opportunities must be sourced, assessed, valued, negotiated and structured, while investments must be monitored throughout their lifecycle before an eventual exit.

A professionally managed fund combines these functions, allowing investors to benefit from both the assets held by the fund and the institutional investment process supporting them, Charalambous said.