Alessandro Graziano, CIO at RiverRock European Capital Partners LLP, joined a recent ION Influencers Fireside Chat to discuss trends in private capital allocation. Graziano shared insights from his extensive experience in financial services, highlighting key developments and future outlooks.

Background and Role: Originally from Italy, Graziano has been in London for 20 years. He graduated from London Business School with an MBA and has worked in investment banking at Merrill Lynch, hedge funds at Chinavari, and now at RiverRock, focusing on private markets and real assets. Since 2022, he has served as the Chief Investment Officer.

Rise in Private Debt Allocation: Post-2009 financial crisis, European banks restricted SME lending due to Basel III regulations, leading to increased private capital to finance mid-sized companies.

Impact of Unpredictable Events: The last five years have seen events like COVID-19 and the war in Ukraine, causing shifts in investment strategies. Investors faced high inflation, increased interest rates, and market volatility, impacting long-term commitments and allocations.

War in Ukraine: The conflict affected commodity prices, inflation, and interest rates, leading to a “denominator effect” where liquid portfolio values dropped, impacting alternative investments.

Need for More Data Points: While the US elections have yet to show significant impact on long-term investments, Graziano highlighted the need for more data points to understand future trends, including default rates and unemployment changes.

Private Credit and Real Assets Strategies – Focus Areas: Graziano expressed optimism for private credit in 2025 and 2026, suggesting a focus on high-quality secured credit or distressed assets. He believes private credit remains a stable allocation regardless of market conditions.

European Investments: RiverRock primarily invests in Europe, with Graziano identifying opportunities in countries like Greece, the UK, and Germany, which offer better pricing and have undergone significant restructuring.

Generalist Approach: Graziano argued that while specialization is crucial for equity investments, private credit can still benefit from a generalist approach, focusing on different metrics rather than specific industries.

Inflation-Linked and Government-Backed: Graziano highlighted the resilience of real assets, particularly those linked to inflation and backed by government revenues. Investments in public infrastructure projects like hospitals remain stable regardless of market cycles.

Impact of Government Yields: The increase in government yields and interest rates has led to adjustments in selling expectations, impacting deal closures and allocations.

Opportunities and Risks: While energy transition presents opportunities, Graziano cautioned against the hype and risks associated with unproven technologies. Renewables remain aggressively priced, and core infrastructure continues to offer stable investment opportunities.

Adapting to Market Changes: Graziano’s role has evolved to focus on adjusting and developing new products in response to changing market environments, rather than solely managing existing portfolios.

Team Dynamics at RiverRock – Blended Approach: For mid-sized asset managers like RiverRock, Graziano believes in a blended approach where team members engage both with investors and in deal execution, enhancing information flow and investment strategies.

Key timestamps:

00:07 Introduction to the Fireside Chats
01:24 Trends in Private Capital Allocation
02:56 Recent Developments in Private Capital
04:24 Investor Concerns and Market Dynamics
10:29 Focus on Private Credit Strategies
15:14 Exploring Real Assets Investment
21:18 Evolution of Roles in Asset Management
22:57 Team Dynamics in Midsize Asset Management Firms
24:26 Conclusion and Closing Remarks