Only 41% of Private Equity Investors Made New Commitments in H1 2009

by Helen Kenyon

  • 18 Aug 2009
  • PE

During a single week in July 2009, Preqin spoke to 100 prominent institutional investors in private equity, sourced from our Investor Intelligence database, to ascertain their views of the industry and their plans for further investment in the private equity asset class.

We discovered that a considerable 59% of private equity investors have held off from making any new commitments to private equity funds during the first half of 2009, and just 54% expect to make fresh commitments to private equity funds during the remaining months of this year.
However, the drop in the pace at which new commitments are being made to private equity funds at the present time is primarily due to the denominator effect and to the drop in the rate of distributions from private equity funds, rather than a decline in appetite for private equity amongst investors – 91% told us they expect to maintain or increase the level of their exposure to private equity over the next 12 months. In addition to the 54% of investors that expect to make commitments to private equity funds in H2 2009, 25% of investors expect to re-enter the private equity market in 2010, meaning the majority of investors will once again become active in private equity by the end of next year.

We also found that certain areas of the private equity market are drawing particular investor attention at present, including distressed private equity, the secondary private equity market, and cleantech.

There is also little evidence to suggest that private equity investors will be reducing their allocations or exiting the asset class. Investors have remained positive about private equity and its longer term benefits, with just 6% of investors anticipating decreasing their target allocations to private equity over the next 3-5 years, in comparison to 30% that anticipate increasing their target allocations.

The complete findings from our investor survey can be found in our research report.

For more information on Investor Intelligence, a vital tool for all professionals involved in the capital raising process for private equity funds, please click here.

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