Shifting Market Drivers: a Moving Target Requires a Comprehensive Focus

Ariel Arazi

Bedrock Group’s range of private equity investments includes opportunities across real estate and private technology.

Shifting market drivers and global events have increased our focus on these types of investment opportunities. For example:

1. The Covid-19 health crisis has left the world deeply in debt. Relative to GDP, the median debt load of developed economies now stands at 120 percent, the highest since World War II.
2. Central banks’ intervention — essentially through quantitative easing, forward guidance, and subsidised loans to banks to help alleviate the debt load — has inflated the prices of most public assets. The US–China trade war was the first warning of a more fundamental shift in markets. If it intensifies, it may lead China to close the door on growth, negatively impacting forward-looking valuations on companies with interests in the region.
3. The Ukraine war has cemented that shift into a bipolar world, while at the same time destabilising the global supply chain and fuelling global inflation. This was already showing signs of acceleration at the end of 2021.

The focus on private market investments has also increased as they offer less volatility, have higher historical returns and more control on leverage. Private firms also have different characteristics to listed ones. They are younger, often have significant intangible assets (such as early-stage research not publicly disclosed) and are proliferating in number while listed ones are in decline.

Since 2011 we have witnessed an epic run-in venture capital-backed software-first companies that have gone on to eat so much of the world, penetrating and disrupting one industry after another, with no end in sight — even if there are bouts of market volatility as multiples and valuations adjust.

Interest in private technology investments is also being driven by the accelerated shift to digital because of Covid-19, and the falling cost of computing. This has accelerated developments in various industries, such as Cloud, 5G, and AI. Clean tech is making a comeback as the market matures: carbon capture and emissions reduction, for instance.

The Bedrock Team

The unique strength of our team ensures that we can source, evaluate, and execute on some of the most exciting private tech deals prior to them going public. Our team has identified two strategies that enable us to gain access to the full spectrum of the life of emerging technologies: Best-in-class, early-stage venture capital fund-of-funds selection and direct pre-IPO investments.

Buy and Hold Quality

Bedrock Group’s property portfolio is not just about AUM but also its ability to buy and hold quality for the world’s biggest asset class We take a pure focus on quality and finding pockets of liquidity in illiquid markets.

We work with some of the largest families in Europe, made possible through an alignment of interests. We set up the Opportunistic UK Investment Club to offer investors the chance to leverage the necessary skills, experience, and local knowledge to successfully acquire and take advantage of value-add real estate investment opportunities.

The programme is focused on seizing unforeseen opportunities in the UK real estate market. The aim is to acquire quality, flexible and desirable assets in sustainable locations. Recent acquisitions focused on a small zone in Clerkenwell, London, as it is as up-and-coming area, with excellent communications, connectivity, and character. We also recently acquired core retail assets in a prime New York location.

Going forward we will continue to take a more opportunistic approach as the downturn appears.