The impact of the global financial downturn on the private equity industry was far reaching. Levels of fundraising for new vehicles fell as many investors were either unable or unwilling to make new investments in private equity. Although a slight improvement was seen in fundraising in Q1 2010 compared to the previous quarter, the increased level of LP caution when approaching the asset class has persisted.
Preqin’s survey of over 100 institutional investors, carried out in December 2009, however, suggests that growing numbers of LPs will be returning to market over the course of this year. 51% of respondents intend to make their next commitment to a private equity fund during the first half of 2010 and a further 16% intend to make their next commitment in H2 2010. A quarter of all respondents had yet to determine the timing of their next commitment.
The amount of capital investors have set aside for new commitments in 2010 also exceeds that set aside in 2009 for the majority of LPs surveyed. 51% intend to commit a greater amount of capital to new offerings in 2010 than in 2009, and just 8% expect the amount of capital used for new commitments to drop.
For more information, please see Preqin’s April 2010 research report on investors’ plans for future private equity fund investments.