LPs and GPs see busier times ahead.
Most private equity investors expect to maintain or increase the amount they invest in the asset class in the coming years, according to a new survey.
The study of limited partners – investors in funds – and general partners – the funds themselves – by Bank of New York Mellon and Private Equity International, found that although optimism is increasing on both sides, the industry is changing during the downturn.
“While LPs want more private equity, they also want ‘better’ private equity, which means aligning their interests with GPs, as well as improved transparency and reporting,” said Brian Ruane, chief executive officer of BNY Mellon’s Alternative Investment Services group. “In turn, GPs need to adapt to this new environment, which started taking shape even before the credit crisis, by building a sophisticated infrastructure to service investors throughout the economic cycle.”
“Investors today are seeking much clearer evidence that private equity fund managers can create fundamental value in the companies they acquire and can deliver consistent returns in good or bad times,” added Tim Jenkinson, professor of finance at Oxford University’s Saïd Business School and director of the Oxford Private Equity Institute.
“For GPs this means launching the next fund will pose a tougher challenge, but for those who can adapt and survive, the result is likely a stronger private equity sector overall.”
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