The financial crisis has undoubtedly had a lasting impact on the private equity industry and fundraising is now more challenging for GPs than ever before. However, although the amount of capital committed to new private equity funds during 2010 fell below expectations, a growing number of LPs are expected to return to private equity in 2011 and make new commitments to funds.
Preqin interviewed over 100 institutional investors in December 2010, and found that 62% plan to make new commitments during 2011. In fact, just under half (49%) of respondents anticipate making their next commitment to a private equity fund by mid-2011. A further 30% have yet to determine the timing of their next investments so the proportion that will seek to make new commitments in 2011 may end up much higher.
The amount of capital made available for new commitments to private equity funds in 2011 is also set to increase in comparison to 2010 for a significant proportion of LPs. 68% of respondents that are planning to make new commitments in 2011 intend to increase or maintain the pace of their commitments in 2011 in comparison to 2010. Significantly, 18% of surveyed investors that are set to be active in 2011 did not make commitments to funds in 2010 and so have decided to return to the market in 2011.
The full results of Preqin’s December 2010 survey of private equity investors can be found in our latest report, Preqin Investor Outlook: Private Equity.