January 20, 2025 Edition

Welcome to this week's newsletter, where we explore significant trends and developments in the global investment landscape. This edition highlights record growth in the private equity secondary market, the IMF's support for Ethiopia's economic reforms, and China's decision to maintain its Loan Prime Rate. Each of these updates carries important implications for investors, shedding light on the evolving dynamics of private investment.

Record Growth in Private Equity Secondary Market

(Source: Yahoo!) The secondary market for private equity funds has reached record transaction volumes, with Ardian recently closing a $30 billion fund—the largest ever in this sector. This surge coincides with a challenging deal-making environment, prompting private equity firms to seek liquidity. Secondary managers are purchasing investments from investors who need quicker access to cash, while the number of continuation funds has quadrupled over the past five years as firms opt to hold onto high-performing assets longer.?

Increased activity in the secondary market offers investors more liquidity options, potentially attracting additional capital. However, the narrowing gap between seller expectations and buyer offers indicates a more competitive landscape, which may compress returns. As cash flows into secondary investments, some investors express concerns over high fees and diminishing returns compared to traditional buyouts, suggesting a need for firms to adapt their strategies to maintain attractiveness in a shifting investment environment.

IMF Approves Second Review of Ethiopia's $3.4 Billion Program

(Source: Investing.com) The International Monetary Fund (IMF) has approved the second review of Ethiopia's $3.4 billion economic reform program, confirming the country's commitment to fiscal discipline and structural reforms. This approval is crucial for Ethiopia as it aims to stabilize its economy, enhance public financial management, and foster sustainable growth. The IMF's endorsement also unlocks additional funding, which will support the government's efforts to address economic challenges and improve the overall investment climate.?

Increased financial stability and the promise of structural reforms may attract foreign and domestic investors, encouraging capital inflows into various sectors. As Ethiopia works to implement these reforms, potential investors will be keen to assess the evolving economic landscape, which could lead to new opportunities in infrastructure, agriculture, and other key industries. However, ongoing political and economic challenges will require careful monitoring to ensure a conducive environment for sustained private investment.

China Maintains Loan Prime Rate

(Source: Investing.com) China decided to keep its Loan Prime Rate (LPR) unchanged, signaling a cautious approach to monetary policy amid ongoing economic challenges. This decision reflects the government's focus on stabilizing the economy while awaiting the potential impact of stimulus measures from the U.S. under the Trump administration. The LPR serves as a benchmark for lending rates, and maintaining it may indicate that Chinese authorities are prioritizing economic stability over aggressive monetary easing.?

By keeping borrowing costs steady, China aims to encourage business investment and consumer spending without exacerbating existing economic pressures. However, the uncertainty surrounding external economic influences, particularly from U.S. stimulus efforts, could lead to cautious sentiment among investors. As firms navigate this complex landscape, the stability of the LPR may encourage some level of investment, but broader economic conditions will remain critical in shaping investor confidence and decision-making in China’s private sector.

In summary, this week's updates illustrate the dynamic nature of the global investment landscape. The record growth in the private equity secondary market, the IMF's support for Ethiopia, and China's monetary policy decisions all present unique opportunities and challenges for investors. We encourage you to reach out to our team for further discussion or support regarding these developments and how they may impact your investment strategies.

Disclaimer: This newsletter contains information from public sources, and any investment decisions made based on its contents are at the reader's own risk. Investing involves risks and might result in loss of capital invested. Past performance is not a guarantee of future results.

Altive Limited (“Altive”, SFC CE Number: BPK587) is a first-class alternative investment platform in Hong Kong licensed under the Securities and Futures Commission (“SFC”) with Type 4 (Advising on Securities) and Type 9 (Asset Management) licenses. Altive only provides services to professional investors, defined in the Securities and Futures Ordinance and its subsidiary legislation. Altive does not provide tax, legal, or accounting advice. This newsletter should not be relied upon for tax, legal, accounting advice, or advice of any nature. Readers should consult professional advice before engaging in any transactions.