Preqin Investor Network’s Blog takes a closer look at the industry from the institutional investor’s perspective.
With investors under greater pressure than ever before to seek out only the best funds in an increasingly saturated private equity market, they must be fully informed of the key indicators available to them to help determine the best fund opportunities in market. With placement agents at the intersection of the fundraising market, helping both fund managers to raise capital and investors to allocate capital, they are well-positioned to provide valuable insight into the key indicators available to investors to narrow down searches to only the best funds.
To complement Preqin Investor Network’s online service, which allows all accredited investors to review important fund material on every private equity, private real estate and private infrastructure funds in market, we spoke to 100 placement agents on the traits that they look for when deciding which funds to represent.
Placement agents told Preqin Investor Network that one of the most important attributes fund managers must exhibit for them to fundraise on their behalf is a successful performance track record. Although performance track record on a firm level is still considered to be important, a more significant proportion of placement agents stated successful track record at team level as key when considering which funds to represent.
Preqin Investor Network also discovered that placement agents believe performance track record at investment team level to be a greater indicator that a fund will go on to successfully meet its fundraising target than performance track record at firm level. Furthermore and most importantly, for investors seeking out funds likely to generate the best returns, performance track record at team level is perceived to be one of the best indicators that a fund will outperform its peers. A notable 81% of placement agents stated that successful performance track record at team level as the best indicator, compared to a much smaller 39% that cited successful performance track record at firm level as key.
Find out more about how placement agents select the best private equity, private real estate and private infrastructure funds, along with additional performance analysis to help investors to select the best vehicles in market, in Preqin Investor Network’s forthcoming Private Equity Fund Selection Report, available from 8th July 2014.