INSTITUTIONAL INVESTOR SENTIMENT SURVEy - PEI Media

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Future Investments and Concerns Current LP Appetite Snapshot Geographic Appetite % 30 25 20 15 10 institutional investor sentiment survey foreword executive summary allocation fees lp – gp relationship • future investments and concerns 5 0 Asia- Pacific CEE Latin America Source: Private Equity International Middle East/ Africa North America Western Europe appendix: global fundraising According to data from Private Equity International, LPs are keen to continue investing in developed markets in Western Europe (22 percent) and North America (27 percent) which are still the most popular choice for private equity investment. There is also appetite for emerging markets, such as Central and Eastern Europe and Middle East/Africa, which are likely to continue gaining popularity amongst investors in years to come. With uncertainty in global markets and sovereign debt crises plaguing developed nations, the risk associated with emerging markets is becoming less of an issue, particularly given the higher expected returns on offer. Latin America has seen a slight decline in interest, with nine percent of LPs expressing an appetite for the region, compared to the 10 percent who have currently allocated capital there. There are fears amongst some LPs of overheating economies which are leading to more cautious LP decision making, where the risk of instability is in some cases outweighing any additional returns which would be gained from such regions. page 29 www.privateequityconnect.com
Strategy Appetite institutional investor sentiment survey foreword executive summary allocation fees lp – gp relationship future investments • and concerns appendix: global fundraising Source: Private Equity International LP appetite for various fund strategies shows that although venture capital and buyout funds remain popular with private equity investors, when compared to LP allocation there is a slight decline in interest for these strategies in favour of others such as secondaries and mezzanine investments. Such preferences reflect the on-going difficulties faced by the industry in the wake of the financial crisis. Following an increasing interest in the purchase of secondary fund in 2011, the market has continued to gain momentum with many LPs committing to secondaries funds, in addition to selling their own existing fund interests on the secondaries market. In addition, a number of LPs are keen to reduce the number of GP relationships they maintain, without reducing their allocation to the asset class. Mezzanine funds are also garnering increased interest, in particular following the slow recovery in the debt market which traditionally supports the kind of deals carried out from buyout funds. Sector Appetite Source: Private Equity International n n n n n n n n n n n n n n n n n n n n n n 20% 11% 3% 4% 2% 9% 10% 6% 8% 26% 11% 7% 11% 6% 2% 4% 3% 25% 5% 4% 5% 18% Buyout Fund of Funds Generalist Infrastructure Mid-Market Mezzanine Other Secondaries Turnaround Venture Biotech/Life Sciences CleanTech/Renewables Energy/Oil & Gas Financial Services Leisure/Entertainment Manufacturing Natural Resources Non Sector Specific Other Retail Transport TMT page 30 LPs continue to back preferred funds which have a wider target, with a quarter of LPs specifying “no sector preference” as a future sector strategy. Another notable trend is the increase in interest in TMT, which in uncertain times is seen as a ‘safe’ investment opportunity. At present, 11 percent of LPs have allocated capital to a fund investing in TMT, however, 18 percent plan to invest in the sector in the near future. www.privateequityconnect.com
Page 1 and 2: Institutional Investor Sentiment Su
Page 3 and 4: institutional investor sentiment su
Page 5 and 6: LP Respondents Breakdown Where is y
Page 7 and 8: Allocation institutional investor s
Page 9 and 10: Over the long-term, private equity
Page 11 and 12: Co-investments provide LPs with gre
Page 13 and 14: Fee breaks should be negotiated dep
Page 15 and 16: Fees should be calculated in connec
Page 17 and 18: LPs are requesting a “Europeansty
Page 19 and 20: GP fund commitments should be a mea
Page 21 and 22: SWFs prefer to target sectors which
Page 25 and 26: A vast majority of LPs conduct due
Page 27 and 28: There is room for improvement with
Page 29: Focus on… Endowments Distribution
Page 35 and 36: The prevalence of zombie funds has
Page 37 and 38: Private equity is coming under incr
Page 39 and 40: Fundraising by Strategy 150 institu
Page 41: Published in July 2012 by PEI Secon

INSTITUTIONAL INVESTOR SENTIMENT SURVEy - PEI Media

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