2009 saw the lowest private equity fundraising total since 2004, evidence of the continuing caution displayed by investors when making new private equity investments. In order to assess investors’ appetite for private equity in 2010, we surveyed over 100 significant institutional investors selected from Preqin’s Investor Intelligence database of 4,000 investors in private equity.
As was expected, our conversations with investors found that LPs approached investments in the private equity asset class in 2009 with greater caution than they had in previous years. A considerable 40% of our sample did not make a commitment to a private equity fund in 2009. Moreover, many of those that remained active made commitments at a slower pace than in previous years.
However, investors are set to become more active during 2010. Two-thirds of the investors we surveyed intend to make new commitments to private equity funds during 2010, an 11% increase on the proportion that were active during 2009. In fact, more than half (51%) expect their next commitment to a private equity fund to occur in the first half of the year. The majority of investors (51%) are also setting aside more capital for private equity investments in 2010 than in 2009.
With a greater amount of investor capital available for new fund commitments this year compared to last, fundraising in 2010 looks set to show some improvement on 2009; however, investors are still cautious in their investments and it will be a while yet before fundraising will even be able to approach the levels seen in 2006 and 2007.
The complete findings of our investor survey can be found here.