Private Equity Investing in 2009

by Joe Childs

  • 08 Sep 2009
  • PE

Preqin’s recent research report concerning private equity investors’ views of the asset class in the current climate found that 59% of institutional investors had not made commitments to private equity vehicles so far in 2009. It is clear, and understandable given the uncertain and unstable economic conditions of the past 12 months, that investors have been making private equity commitments at a reduced rate compared to previous years.

The data gathered from the survey showed that a number of investor types have continued to invest in private equity in considerable numbers. However, approximately half of the insurance companies we spoke to, for example, have committed to at least one private equity vehicle in the first eight months of 2009. Similarly, 52% of public pension funds told us that they had invested in private equity this year.

Employees' Retirement System of Texas (ERS) is one example of a public pension fund that has committed to the private equity asset class in recent months. It made five commitments totalling $410 million in the first five months of 2009 after increasing its target allocation to the asset class in September 2008. The system plans to make further private equity commitments this year and anticipates committing approximately $600 million to private equity vehicles in the period July 2009 - June 2010.

University of Michigan Endowment has also made commitments to private equity this year. Most recently, it agreed to invest $7.5 million in Andreessen Horowitz Fund I, a technology focused early stage vehicle. Overall 46% of endowments stated that they have made new private equity commitments in 2009. A similar number (45%) of foundations and family offices have also committed capital to private equity this year, not only indicating that a number of institutional investors continue to invest despite the economic downturn, but indicating that a range of investor types remain active in the private equity asset class.

For the full research report on Preqin's investor survey please click here.

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