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Private equity investments have become increasingly important portfolio allocations to many investors as they seek new sources of alpha and yield. Since 2000, the PineBridge Private Funds Group (PFG) team has focused on offering our clients access to market areas where we believe there is an attractive opportunity for potential outperformance – like the middle market.

The PFG team focuses on the broad middle market, which includes primary partnership sizes below US$2 billion, and secondary and co-investments generally less than US$100 million.

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Private Funds Group Highlights

More than US$16.5 billion committed in the private markets since 2000

500-plus limited partnerships, with more than 300 distinct general partner (GP) relationships

Nearly 100 advisory board seats across the portfolio

21 dedicated private fund investment professionals located in New York, Mexico City, Hong Kong, Zurich, and London

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As of 30 June 2021. Includes all current investments within a fund/account managed by the PineBridge Private Funds Group.

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A distinct approach

While many firms focus on the middle market, we believe there are few of our size that have the breadth to provide primary, secondary, and co-investment capital to funds and companies in both developed and emerging markets. We provide customized solutions that aim to create global midmarket portfolios using various strategies to achieve targeted risk and return profiles.

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Managing Director Peter Hwang, who specializes in Asia private equity and is based in Hong Kong, believes the opportunity Asia offers to private investors has been abundant but involves a wide variety of considerations – and these factors vary from country to country, requiring embedded professionals to wade through the nuances. “There is no such market as ‘Asia,’” Hwang says. “Each country is distinct and requires its own strategy. Investors need to be on the ground to build a strong relationship network, aiming to fuel a successful deal pipeline.”

The PFG team has been in the region since 2007 and has seen these markets grow and mature. “Over the years, we’ve sharpened our focus and believe our local presence in these markets has given us an edge, allowing us to source and execute on local opportunities,” Hwang notes.

Steven Costabile, Managing Director and Global Head of the Private Funds Group, agrees. “In my opinion, being smaller has enabled us to think outside the box and be more creative as we construct portfolios,” he says. “I believe we have been able to execute opportunities and solutions that some of our bigger competitors simply could not, while staying true to who we are.”

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Disciplined risk management

The use of leverage, the supply of capital flowing into the markets, and the path of inflation are perennial client concerns. While top-line growth is sought after, private equity investments tend to be longer-term and less liquid. This means origination and due diligence capabilities become even more critical in evaluating the risks and value creation potential of an opportunity.

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As part of that assessment, in the first quarter of 2021, the PFG group completed its second annual ESG survey of general partners with whom the firm maintains an active relationship. This year our survey focused on diversity & inclusion (D&I) initiatives, given the growing momentum behind gender and racial equity issues – especially in light of the pandemic’s impact, which we believe has placed greater pressure on women and minority communities and increased the urgency of addressing these issues.

While the survey showed an overall improvement in attention to ESG and specifically D&I issues, there is much work left to be done. “These surveys are one way that we’re seeking to enhance the dialogue about ESG issues that are important to us and to our clients,” Alcaide notes. “The results have been eye-opening as to where to focus our efforts, and we look forward to partnering with GPs to further move the needle on ESG-friendly practices.”

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A team effort

Collaboration is a key differentiator for the PFG team. According to Alcaide, “We work with vast amounts of data to assess our markets, but to help ensure we’re being objective, we collaborate with our teammates across the globe. Colleagues in Hong Kong, New York, and London, for example, had different points of view on Brexit risk. This approach was quite helpful when we positioned our business during challenging markets like the European Debt Crisis in 2012.”

Collaboration is critical to the team on many levels – and because collaboration is at the core of PineBridge culture, it’s easy to achieve, whether our colleagues are across the room or across the globe. “In my opinion, it’s so easy to access the expertise across our firm,” says Hwang. “I can just walk across the floor or pick up the phone and connect with a colleague on our equity or fixed income teams. I believe that adding the input of local analysts in our network means we leave no stone unturned.”

Alcaide adds, “We collaborate across our global team to connect the dots across sectors and geographies. We want, and need, information to be fluid across our platform, and we make sure everyone has an incentive to share their expertise and experience whenever it’s needed.”

But collaboration does not mean conforming to a firmwide “view” or prescribed way of doing things. “Clients want a firm with an institutional process, but not one that bluntly enforces a house view,” says Costabile. “At PineBridge, we are able to have our own points of view and execute the business in the way we believe is best. I believe large competitors are less likely to do this.”

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He continues, “We believe people learn more by being involved in the process, so we strive to expose all of our junior talent to our broad platform and encourage them to ask questions. We expect our junior people to be able to take the information they’re given, analyze it, and draw their own conclusions. We believe this makes our team better at what we do.”

When asked what differentiates the PFG team from its peers, Costabile says, “We provide access to the resources of our team and that of PineBridge in a comprehensive way that we believe our larger competitors cannot.”

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Disclosures

This material was prepared by the Private Funds Group (“PFG”) for distribution to certain permitted contacts of PFG for educational purposes only. This report is not an advertisement and is not intended for distribution, commercial use or the general public. This is not an offer to sell or solicitation of an offer to purchase any interest in any investment fund or product. It may not be forwarded to any other person or entity. It is not a product of PineBridge Investments. In addition, the views expressed do not necessarily reflect the opinions of any other investment professional at PineBridge Investments, and may not be reflected in the strategies and products that PineBridge offers. Benchmarks are used for illustrative purposes only, and any such references should not be understood to mean there would necessarily be a correlation between investment returns of any investment and any benchmark. Any referenced benchmark does not reflect fees and expenses associated with the active management of any investment. Opinions expressed herein may differ from the views or opinions expressed by other areas of PineBridge Investments. It should not be assumed PineBridge will make investment recommendations in the future that are consistent with the views expressed herein, or use any or all of the techniques or methods of analysis described herein. PineBridge Investments and its affiliates may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this document. Information from third party sources has not been independently verified. Any opinions, projections, forecasts and forward-looking statements are speculative in nature; valid only as of the date hereof and are subject to change. PineBridge Investments is not soliciting or recommending any action based on this information.