Private Markets
Four broad asset classes; one unified global capability.
Federated Hermes offers suitable investors a broad range of private market investment solutions across four asset classes: real estate, infrastructure, private equity and private debt.
As stewards of institutional clients’ capital, we have a proven track record in these four asset classes with total AUM of over US$19bn.
Quick links
Source: Federated Hermes, as at 31 December 2021.
Why consider Federated Hermes Private Markets?
Our solutions
Our real estate capability originated in 1983 and is built around an award-winning team of 31 property professionals, with 20 years’ average experience, offering client-focused property investment solutions through four pillars of growth:
- FHPUT pooled fund – Our flagship balanced, open-ended UK real estate fund.
- Transformational urban regeneration and placemaking – Our best-in-class urban regeneration developments capability delivered by MEPC, our specialist in-house development and asset management platform.
- Hestia residential platform – Our vertically integrated development, investment and operational platform delivering build-to-rent properties serving the affordable/social renters’ market.
- Thematic investments – Our life science and technology clusters offering clients access to relevant thematic real estate investments.
Our private equity capability has a 29-year track record in fund investments and 20 years in co-investments. We have invested alongside 119 GPs since 2010 and committed $7.3bn to 289 funds in total. We have made 255 co-investments in total with a 18% realised IRR and 1.8x realised return on 111 exited co-investments.
Our private equity strategy is:
- Truly global in its investment scope, through offices in London, Singapore and New York
- Consistently mid/lower mid-market with a focus on ‘next generation’ managers and fast-growing companies with an EV <$500m
- Strongly thematic based on four mega-trends and 24 underlying target investment themes
- Structured in the form of co-investment funds, hybrid primary and co-investment funds as well as bespoke solutions through segregated accounts
- An approach to sourcing capital from institutions willing to partner with us through multiple funds
The team at Federated Hermes began investing in infrastructure assets in 2011 and now has more than $4bn of assets under management. We have direct investments in a hard-to-replicate, unlisted portfolio of 12 operational infrastructure assets across two co-mingled funds plus five separately managed accounts.
Our Infrastructure strategy is to:
- Focus on Core and Core+ assets (including ‘build to core’), by which we mean infrastructure assets or businesses that seek to generate forecastable, lower volatility returns with a high proportion of cash yield
- Take minority stakes in leading infrastructure companies with governance rights such that we can exercise disproportionate influence
- Focus on mitigating downside risk to preserve capital value
- Concentrate on UK opportunities, the most active infrastructure market in the world. But we also have four important assets in Europe.
- Focus our future investment on the energy transition to net zero through opportunities with existing investee companies as well as new opportunities
Yield and capital preservation are at the forefront of our approach to investing in private debt. Beginning in 2007, our team targets the opportunity in direct lending, real estate debt and trade finance with $1.1bn of assets under management
Our private credit strategy is based on our belief that:
- Direct, senior secured lending to small- and mid-sized businesses can offer income above levels provided by comparable fixed income assets
- Bilateral loans in the real estate sector can allow for more control and engagement as well as stronger investment returns over the long term
- Trade finance provides the potential to generate competitive yield without taking excessive interest rate and credit duration risk
- Potential to exploit market inefficiencies to generate alpha over the long- and short term.
- The potential for lower correlations with mainstream asset classes.
