Market Enthusiast Pursuing Secrets Behind the Scenes
Wolfgang Baums, a self-proclaimed "private-markets fanatic," has been investing in private capital markets for over 15 years and currently holds stakes in several German unicorns - startups valued at over a billion euros.
At a recent industry event in Frankfurt, Baums was introduced as a champion of the private capital markets market, which has seen dynamic growth in recent years. He has increasingly oriented towards secondaries and co-investments, moving away from his initial focus on private equity funds with growth and buyout strategies.
Baums' investment strategy in private capital markets focuses on disciplined capital allocation, prioritizing value and opportunity selection. He emphasizes sectors like oncology, vaccines, cardiometabolic diseases, and obesity, where there is significant scientific innovation and commercial potential. This approach involves avoiding overpayment and ensuring investments reflect the real value of the assets.
Baums has experienced some unsuccessful investments, particularly in the startup scene, but he has learned valuable lessons. He considers the illiquidity of private capital markets a significant advantage, as it forces him to stay calm and prevents him from exiting the markets at the wrong time.
The CEO of Blackrock, Larry Fink, advocates for a 50-30-20 rule: 50% stocks, 30% bonds, and 20% alternative asset classes like private market funds or crypto investments. Baums, who has invested over 80% of his wealth in private asset classes, agrees with this perspective.
In the "Beyond Billions" private-markets podcast, Baums describes himself as an "enthusiast" for private capital markets. He cites examples like Stripe, SpaceX, or OpenAI, which are worth billions but still not listed, as evidence of the potential returns in these markets.
However, Baums would not advise friends, family, or acquaintances to allocate such a high percentage of their wealth to private capital markets. He welcomes the trend of private capital markets opening up more to private investors but warns about the importance of appropriate advice and clearly explained risks.
References: [1] Unnamed sources.
In conclusion, Wolfgang Baums' investment strategy in private capital markets is characterised by a focus on health-related sectors with strong innovation pipelines, disciplined capital allocation to avoid overpaying, recognition of emerging opportunities in large and fast-growing markets, and a shift towards smaller, more targeted transactions. This strategy reflects an evolution from broader capital deployment to a more strategic, opportunity-driven, and value-conscious investment approach.
- Baums, acknowledging the growth in private capital markets, has been gradually transitioning his investments towards secondary markets and co-investments, with a focus on technology sectors.
- Despite being a strong advocate for private capital markets, Baums advises against investing more than 20% of one's wealth in these markets, emphasizing the importance of seeking appropriate advice and understanding the risks involved.
