Profile of the Private Equity Placement Agent Industry – December 2014

by Kamarl Simpson

  • 02 Dec 2014
  • PE

Akin to the diversity of GPs, the placement agent universe is comprised of a range of specialized divisions of large brokerage firms as well as mid-sized and small independent firms that are focused solely on providing placement agent services. Concurrent with the emergence and rapid expansion of alternative fund managers and institutional investor participation in the private equity space, the placement agent industry has evolved over the last decade. More recently, growing investor demands on fund managers have created the opportunity for placement agents to expand their operations beyond the traditional role of capital sourcing; more firms now offer investor relations services to facilitate the ongoing communication and information needs of LPs. 

As competition in the fundraising market has increased, so too has the diversity of fund strategies available to LPs. Of the placement agents that contributed to the final closing of at least one private equity vehicle so far in 2014, 65%have no fund type specialization and instead are able to assist in fundraising for a variety of fund types. This is up from 2013, when 60% of active placement agents worked on a variety of fund types. 

Seventy-one percent of active placement agents in 2014 are based solely in one region, primarily North America. An additional 21% of placement agents have a presence across two or three regions, and the remaining seven percent are global, with at least one office in North America, Europe, Asia and other regions worldwide.

The percentage of active placement agents in 2014 that work on funds investing primarily in the traditional hubs of North America and Europe has remained very consistent when compared with 2013. The proportion of placement agents working on North America-focused funds has remained the same at 88%, while the proportion working on Europe-focused funds has increased from 81% to 83%. Meanwhile, Asia and Rest of World preferences have seen a slight reduction compared to 2013 (74% and 70% respectively). However, as these regions become more significant sources of institutional capital, placement agents are likely to build upon their resources in these areas. Of the active placement agents in 2014, 57% work on fundraising across all regions.

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