INSTITUTIONAL INVESTOR SENTIMENT SURVEy - PEI Media

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Focus on… Pension Funds Distribution of Pension Funds by Region 350 300 250 No. per region 200 150 100 50 0 Asia- Pacific CEE Source: Private Equity International Latin America MEA North America Western Europe institutional investor sentiment survey Pension funds have primarily invested in buyout funds with 60 percent of all pension funds currently or previously investing in the fund strategy, primarily in North America and Western Europe. In particular, North American pension funds have a considerable preference for domestic vehicles, with just over 90 percent of all American and Canadian pension funds currently invested in Northern American private equity funds. Similarly, Asia-Pacific pension funds exhibit an almost identical trend, with 90 percent of all pension funds investing in a regional private equity fund. But with the growing prominence of emerging markets, pension funds are increasingly looking to take advantage of opportunities presented in these regions. China, in particular, has fast become a very attractive destination for capital, with better regulation of markets and a more stable investment environment. Currently, 45 percent of all pension funds globally have an appetite for investing in Asia-Pacific private equity funds. In addition, uncertain market conditions have led to the rise of separate accounts and co-investment partnerships. Pension funds are taking a greater interest in how their capital is being utilised, and both of these investment strategies provide investors with a higher degree of control and transparency. CalPERS CIO Joseph Dear outlined some of the benefits of creating customised arrangements with managers, namely “better alignment of terms and conditions”. Given that investors are wary about forming new relationships with fund managers in the current economic climate, it makes sense for pension funds to take advantage of their existing GP relationships, especially if they intend to maintain the size of their private equity programmes. The Employees Retirement System of Texas launched a co-investing programme in late 2011 in a bid to slash their fees and carry expenses. At the same time, the retirement system does not intend to lower their overall commitment to the asset class, choosing instead to form fewer new relationships, paving the way for more tailored LP-GP agreements. As the private equity industry gears up for the second half of 2012, there are two clear trends emerging from the financial downturn and the European sovereign-debt crisis. There will be a gradual improvement for pension fund assets coinciding with the growing importance of emerging markets in addition to an increasing level of scrutiny by pension funds on their limited partnerships. foreword executive summary allocation fees lp – gp relationship future investments and concerns appendix: global fundraising page 5 www.privateequityconnect.com
Allocation institutional investor sentiment survey Current LP Allocation Snapshot foreword executive summary allocation • fees lp – gp relationship future investments and concerns Geographic Allocation % 30 25 20 15 10 appendix: global fundraising 5 0 Asia- Pacific CEE Latin America Middle East/ Africa North America Western Europe Source: Private Equity International page 6 Data from Private Equity International shows that North America and Western Europe remain the most popular regions for allocation to private equity, with a respective 26 percent and 21 percent of LPs currently investing in the region. Asia-Pacific is close behind with 19 percent of LPs currently allocating capital to the region. This is no surprise given the emergence of India and China as particularly attractive investment opportunities. Whilst they have undergone rapid growth over the past few years, there is still much potential in the region and investors are keen to take advantage of the opportunities available here. Emerging market regions, in particular Latin America (10 percent), are currently under-represented in terms of private equity allocation, however, there are signs of greater interest given the higher predicted returns from these regions than those expected from developed regions. www.privateequityconnect.com
Page 1 and 2: Institutional Investor Sentiment Su
Page 3 and 4: institutional investor sentiment su
Page 5: LP Respondents Breakdown Where is y
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 and 30: Focus on… Endowments Distribution
Page 31 and 32: Strategy Appetite institutional inv
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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