About Andrea Kramer
In 2014, Andrea Kramer, then Managing Director and Head of the Global Fund Investment Team at Hamilton Lane, identified energy as "probably the hottest area" in private equity, citing the need for infrastructure investment in natural gas and shale. She also noted a shift toward shorter-duration, yield-generating investments and described technology as a heavily pursued sector due to its replicable business models and recurring transaction fees.
By 2016, Kramer stated that a "low and slow growth" environment could create volatility that benefits private equity purchase pricing. She expressed caution about the U.S. market while signaling a preference for small-end buyouts in Europe, which she described as a "green light" area. Kramer predicted that an expected interest rate hike would reduce credit availability and lower purchase prices, though she noted that distressed and credit strategies in Europe could present buying opportunities. She added that limited partner return expectations remained at the traditional "two-and-twenty" model, with net IRRs in the mid-teens.
Source: AI-verified profile updated from Andrea Kramer's recent appearances.
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Transcript (12 segments)
R
Rhonda0:00
Andrea Kremer, managing director and head of the global fund investment team at Hamilton Lane. So good to see you at the Deal Economy event.
A
Andrea Kramer0:05
Same here. Thank you, Rhonda. There's so much to talk about. It's already been a fascinating year in 2015. When you look out to next year, what are your expectations?
R
Rhonda0:14
Yeah, it continues to be a really interesting time for private equity. As we look at 2016, one of the key things that we're thinking about is an environment where there is low and slow growth, which we expect will present a little bit of volatility in the markets, which isn't necessarily a bad thing for purchase pricing and provides opportunities for private equity going forward.
A
Andrea Kramer0:38
And where are those opportunities, either geographically or by sector?
R
Rhonda0:41
For us, one of the key things we've been thinking about is how to deploy that across geographies and across sectors. We've been a bit more cautious in the US, so the buyout at the small end could be an interesting opportunity. We see new and interesting opportunities in Europe. That is an area where we focus. If you think about our red light, yellow light, green light, it's more green light for the small end of Europe on the buyout side.
A
Andrea Kramer1:04
In the current market environment, is it more favorable for PE, would you say, than in years past?
R
Rhonda1:10
It's definitely a changing market. It is a changing market. Given the fact that there is going to be low or slow growth, I wouldn't say that it continues to provide huge robust opportunities. The fact that the credit opportunities have been so robust over the last year and frankly over the last seven years have provided a really good backdrop for private equity investors to get their deals done and to get it done pretty cheaply and with very low covenants. Our expectation is that may taper off as the interest rate hike is looming and expect that it will actually occur. With that in mind, we should expect that purchase prices will come down overall and credit may be harder to come by. Now, if we were to look at other strategies which would be interesting on the distressed and the credit side, just given the current rate environment and given what the ECB continues to do in Europe, for example, those could present some interesting opportunities to buy.
A
Andrea Kramer2:08
This is an asset class in which people make money. Do you see that change in the head? I would assume challenges maybe yes, but it's just maybe different expectations on the terms.
R
Rhonda2:18
I think expectations on returns from an LP perspective have not changed. They continue to be that two-and-twenty expectation overall. The performance continues to provide mid-teen returns on the IRR side on a net basis. I think as we look at aggregate performance over the last ten years, that has been the aggregate or general performance overall, and it continues to deliver from a private equity standpoint.
A
Andrea Kramer2:47
Is there a potential roadblock for PE in 2016? What are the exogenous factors that could impact private equity?
R
Rhonda2:56
I don't know the answer to that. I think a low, slow growth environment is probably an okay situation for private equity. If the economy itself were to just completely stutter and stop, then it would be challenging for private equity or frankly any asset class to generate returns.
A
Andrea Kramer3:14
Andrea Kremer with Hamilton Lane. It's been great speaking with you. Thank you very much for that.
