The Swing Toward Separate Accounts

An unmistakable trend has emerged among institutional investors in the private equity asset class – a move toward separate accounts. Influential institutions such as the California Public Employees’ Retirement System (CalPERS) and the Teacher Retirement System of Texas (TRS) are seeking to structure flexible relationships with major private equity firms to invest broadly and opportunistically across geographies and strategies, and without pre-defined commitments to specific funds.

The trend has the potential to fundamentally alter the private capital investment business, according to Scott Higbee, a Partner in global private investment management firm Partners Group. In an exclusive and extensive interview with Privcap, Higbee discusses the reasons why LPs are now more interested in separate accounts, what benefits investors see in these structures, how the trend will favor highly diversified private investment firms, why this is not only a game that big investors can play, and why the swing toward separate accounts has real momentum.