“Best time in 10 years to invest in private markets”: Mediobanca and Russell launch third fund

Italian investment

Italian investment banking and asset management group Mediobanca is launching a new private markets fund aimed at Italian private clients, aiming to offer a diversified strategy that will seek to exploit opportunities arising from the economic and financial dislocations caused by Covid-19.

The new Mediobanca Private Markets Fund III vehicle, the third fund from the investment programme developed by Mediobanca Private Banking in collaboration with Russell Investments, marks an expansion of the Milan-headquartered banking group’s alternative investments offering for private clients in Italy.

Having previously raised over USD250 million with the first two funds, the new strategy – which will be in the placement phase until the end of September – will focus on three main areas: the secondary market, distressed strategies and opportunities in dislocated industrial sectors. 

“In an environment characterised by uncertainty and liquidity stress, the portfolio will be structured in order to exploit new opportunities that arise, particularly in the most distressed vintage funds,” the two firms said in a statement. 

The fund will maintain a high level of diversification by asset classes, sectors and geographies – with a focus on more efficient markets such as North America and Europe and, more selectively, Asia. 

“In the North American market, currently the most mature among the private markets, about 20 per cent of portfolios are allocated to direct investments in companies or private equity funds,” says Angelo Viganò, Head of Mediobanca Private Banking. “This sector may also have ample room for growth in Italy: the economic and financial crisis caused by Covid-19 has further highlighted private capital’s potential to support the real economy.” 

He adds: “History teaches us that investments made during recessions have potentially higher returns than those made in the preceding years. This is the best time in the last 10 years to invest in private markets.” 

"Due to the Covid-19 pandemic, the world is facing an unprecedented period of volatility, uncertainty and liquidity stress,” comments Theo Delia-Russell, Deputy Head of Mediobanca Private Banking and Head of Products & Services. 

With many opportunities stemming from the current liquidity and cashflow crisis, the new fund will aim to create investment opportunities by exploiting market dislocation to build an anti-cyclical exposure, through the rapid use of capital and the acquisition of assets at a high discount. 

"The best way to access private markets is to spread the investments by year, what we technically call vintage,” adds Delia-Russell. “Each period presents opportunities and specific characteristics, opening up new potential within strategies which then mature over subsequent years.” 

For the latest edition of the Mediobanca Private Markets Fund, Russell Investments has been chosen once again to manage the fund. Russell will continue to leverage its capabilities and exclusive relationships with some of the most prestigious fund managers in the world, which are generally not otherwise accessible. 

“The private markets investment programme developed in recent years with Mediobanca Private Banking is enhanced by a timely strategy designed to seize the new opportunities arising from the Covid-19 induced crisis,” comments Luca Gianelle, Managing Director at Russell Investments Italy. 

“Typically, in contexts such as the current environment, the already wide dispersion of returns among managers investing in private markets further increases. It is therefore important to build an efficient and well-diversified portfolio that includes private markets funds that can yield the best results in the current investment cycle.”