Private Equity: The Next Frontier?



Published On

June 9, 2014

Published In


FRIDAY, OCTOBER 11, 2013 ¬© 2013 Dow Jones & Company. All Rights ReservedPrivate Equity: The Next Frontier?The rich have two words for the rest of us: private equity.By LIZ MOYERAS OF THE END OF THE THIRD QUARTER, members of TIGER 21, a private network of high-net-worthindividuals, had allocated nearly one-fifth of their portfolios to private equity, either in funds or in direct stakes inprivate companies. The trend toward private equity began two years ago, when TIGER’s members began shiftingmoney to the strategy rather than fixed income, cash or commodities.At 19% in the third quarter, the private equity allocation is above the group’s historic 12% average, says TIGER 21founder Michael Sonnenfeldt, though in line with the last six quarters.The shift away from public markets over the last few years reflects a realization by high-net-worth people that ifthey want to preserve their wealth, they have to search for better investments, Sonnenfeldt says. TIGER 21’s 220members, with $20 billion of assets among them, are built their own businesses or serve as top executives in financialservices, real estate, industrial and consumer goods or other areas and are making private investments because “theywant to reproduce some of their success,” he says.Sonnenfeldt made his millions when he sold his real estate firm in the 1990s before founding TIGER 21 as a networkfor wealthy individuals to bounce ideas off each other, frequently investment ideas. He also owns a private-equityfirm that invests in energy-related companies.TIGER 21’s members have 24% of their portfolios in public equities, 21% in real estate and 15% in fixed income.Another 8% is in hedge funds. Their smallest allocations are to commodities (1%) and currencies (0%), according tothe quarterly member survey.