Emerging Trends in the Private Equity Capital Raising Market
14 December 2016
On November 17th, Intralinks hosted a panel event for GPs, LPs and Placement Agents at Home House, a private membership club in Mayfair, London, to discuss shifting market trends. I moderated a panel consisting of Laura Leyland, senior vice president of Asante Capital Group; Richard Stus, head of private equity research at Preqin; Marc Nahum, a private equity consultant; and Daniel Greenaway, partner at Mishcon de Reya.
The panel’s first topic was the overall outlook for the next 12 months. All of our panelists agreed that the sentiment was broadly positive. One panelist quoted the findings of a recent Prequin survey of LPs that suggested 83 percent of LPs planned to match or exceed the amount they had invested over the last 12 months in PE – good news for the market. With a consensus quickly reached that, despite political volatility, the outlook is good, the dialogue quickly turned to the evolution of LPs.
The evolution of the LP
Within the room there appeared to be an appreciation of the fact that many larger LPs are becoming more sophisticated, are depending less on investment consultants, and are starting to look at different asset classes internally. As LPs become increasingly advanced, their demand for data is also growing, with GPs’ investor relations team coming under pressure – a topic which led us nicely into the next discussion point: fundraising.
The fundraising process
The real question here would appear to be: Does the fundraising process ever really stop? The answer is no. Once an initial fund is raised, maintaining LP relationships prior to the next fundraise is absolutely vital. The Prequin survey revealed that capital raising is easier for some than others, with strong fund managers (30% of funds raised) having little trouble raising funds in under 12 months, while others (40% of funds raised) taking up to 18 months – clearly a bifurcated market. However, some argued that these timeframes are misleading: Although the official start to finish might take 12 months, in actuality at least a year’s planning will have gone into the raising of a new fund, making the process a minimum of two years in length.
Demanding more from technology
The use of technology by GPs also appears to be evolving. Historically, many GPs chose to give consultants and LPs unrestricted access to all information throughout the fundraising process. However, today many are choosing to drip-feed information, with the most sensitive and critical information reserved only for those who have proven they are serious about the fund.
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As Director of Strategy and Product Marketing for Intralinks, Meghan McAlpine is responsible for the go-to-market strategy and driving the growth of the company’s Alternative Investments solution, the leading communication platform for private equity and hedge fund managers and investors.
Prior to joining Intralinks, Meghan worked in the Private Fund Group at Credit Suisse. While at Credit Suisse, she raised capital from institutional and high net worth investors for domestic and international private equity firms.