Partners Group has launched a private markets royalty investment arm that will include an evergreen fund for the wealth channel.
It will be led by recent hire Stephen Otter, who was previously head of royalty finance at PG3, the family office of Partners Group’s founders.
The Otter team, which has a strong seed portfolio, will be integrated into the wider Partners Group business.
The division will invest in sectors such as intellectual property, pharmaceuticals and entertainment, as well as energy transition, sports and brands. According to Partners Group, the royalty market is currently valued at more than $1 trillion and is expected to grow rapidly.
In addition to plans to launch an evergreen fund that will provide private investors with access to this asset class, Partners Group will offer royalty investment opportunities through its bespoke solutions.
“We strongly believe that private markets royalties are an asset class that is complementary to our existing private markets offerings.
“Royalties have seen strong growth in recent years and have become more applicable across the economy, including many of our private equity and infrastructure focus areas such as healthcare and the energy transition,” said Juri Jenkner, partner and president of Partners Group.
Otter added: “As we develop our private markets royalty business, we differentiate ourselves from industry standards in two key ways.
“Firstly, by looking at a wider range of royalty opportunities across different sectors, we will take advantage of Partners Group’s strengths in applying a relative value approach when selecting the most attractive investment opportunities for our clients.
“Secondly, by using an evergreen structure instead of a closed-end fund, our offerings to clients will be better tailored to the longer duration of the underlying royalty investment.”
Partners Group, which has $147 billion in assets under management, recently launched two new semi-liquid funds for wealthy individuals in Europe and Asia, focused on infrastructure and energy transition assets.
Royalties are an increasingly interesting asset class for investors in private markets as they are seen as uncorrelated with traditional investments.
Over the past few years, several firms in particular have taken on some of the music royalty business, although after the initial push many have now slowed their investments.