Preqin survey of private equity investors

The tide may be turning for private equity investments, with 73 per cent of investors planning to make new private equity commitments in 2012, according to a global survey of 100 institutional investors by Preqin.

The survey found that the global financial crisis has not deterred institutional investors from private equity, with more than 80 per cent of institutional investors “feeling either more positive, or not changing their opinion, about private equity”.

Asia and emerging markets remain attractive geographical regions for the investors surveyed and small to mid-market buyout funds remain the most attractive to investors, as do distressed private equity and secondaries funds.

Almost three quarters of investors interested in the secondaries market expect to increase their level of secondary market activity in 2012, the survey found.

The Preqin survey showed that 35 per cent of investors are below their target exposure and are likely to make new commitments in 2012. Activity is most likely to come from European investors, with 42 per cent of investors in that region below their target allocation.

Almost a third of investors in the US are above their target allocations.

Sponsored Content

Investors, generally, were happy with the performance of their private equity investments, with 81 per cent of investors reporting their private equity investments had met performance expectations.

Almost two thirds of investors expect their private equity investments to achieve in excess of returns of 400 basis points over public markets, while 95 per cent of investors expect their private equity investments to garner returns of at least 200 basis points more than their public market benchmark.

According to Preqin, fundraising will remain a challenge in 2012, with more than 1,800 funds “currently on the road” seeking aggregate commitments of over $700 billion.

Manager selection, and choosing the right partner, is one of the key challenges for investors, the responses showed, but investors also plan to diversify their managers, with 38 per cent of investors planning to increase the number of GPs they invest with over the longer term. About 84 per cent of respondents said they would consider forming some new GP relationships over the next 12 months.

The structure of investing is also changing, with 40 per cent of investors looking to invest directly in private companies, 33 per cent seeking exposures through co-investments alongside the GP and 22 per cent looking to make direct investments on a proprietary basis.

Leave a Comment

Sort content by

CheckRisk rethinks the risk business

Beta-driven equity investors may currently be taking far greater risks than they are getting paid for when seeking broad market exposure, British risk expert Nick Bullman warns. Bullman, the founder of specialist risk consultancy CheckRisk, has developed a methodology using macroeconomic research along with econometric and behavioural risk inputs to identify what he describes as

Conservative Korea

Korean corporate pension funds have grown more conservative in their investments, increasing already high allocations to guaranteed-insurance contracts (GICs) and term savings, the Towers Watson Korea Pension Report shows. The annual snapshot of the Korean pension market found that 93 per cent of corporate pension-plan assets are allocated to principal-guaranteed products, of which nearly 58

Report reveals Norway’s SWF climate risk

Norway’s 3496 billion kroner (US$582.7 billion) sovereign wealth fund could suffer significant losses in a range of climate-change scenarios if it fails to hedge its risk by investing in climate-sensitive assets, the release of a confidential report shows. Norway’s Ministry of Finance recently released an extensive study by asset consultant Mercer on the effects of

Risk modelling
requires review

Advocating the use of financial models a six-year-old could understand and warning that the dogmatic belief in overly complex and unrealistic models contributed to the financial crisis were some of the challenging views put to the attendees of the recent CFA Institute’s annual conference. Throwing down the gauntlet was GMO asset-allocation team member James Montier,

Institutional investors fall behind USA Inc

Institutional investors are clearly behind in risk management compared to the innovative techniques implemented in treasury departments of corporate America, chief investment officer of Wurts and Associates, Jeff Scott says. Scott, who spent his career managing the balance sheet at Microsoft, Dow Chemical, the Alaska Permanent Fund and now investment consultant Wurts, says institutional investors

Pipes over promises

The Canadian Pension Plan Investment Board (CPPIB) is shunning European sovereign bonds, with the $152.8-billion fund’s head of investment saying European infrastructure offers far more attractive risk/return opportunities. Mark Wiseman, CPPIB’s executive vice-president of investments, told delegates at last week’s Milken Institute Global Conference 2012 in Los Angeles that the fund had chosen not to

Previous