Investors Show a Reduced Appetite for Mega Buyout Funds – August 2012

by Joanna Nye

  • 07 Aug 2012
  • PE

Buyout funds continue to be a popular choice for investors – over half (55%) of the active investors in private equity funds tracked by Preqin’s Investor Intelligence database have an appetite for these vehicles.

Despite the popularity of investing in buyout funds among investors in private equity, it appears that LPs may be less favourable towards investments in larger and mega buyout funds. Preqin’s H1 2012 Investor Outlook Report showed that 45% of investors viewed small to mid-market buyout funds favourably at that time and 16% shared the same view regarding large to mega buyouts. However, a similar study conducted in H2 2012 revealed that although a higher proportion (49%) of LPs felt small to mid-market funds presented favourable investment opportunities at this time, a lower proportion (10%) felt large to mega buyout funds were attractive investment opportunities.

Although a reduced number of LPs are looking to target larger buyout funds over the next 12 months, these funds have not fallen off investors’ radars. Apax VIII, a 2012 vintage buyout vehicle, which is targeting around $9bn, has received a significant amount of attention from investors, having held a first close on $4.3bn in March of this year. So far a number of North American public pension funds have been among the investors in the fund, including Washington State Investment Board, Michigan Department of Treasury, which committed $100mn, and CPP Investment Board, which committed €350mn to the vehicle.

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