3 Predictions for the Alternative Investments Industry for 2019

Important trends that will affect the Alts landscape in the coming 12 months.


8 January 2019

Alternative Investments are continuing to be a critical element to Investors’ long-term investment objectives. Intralinks’ 2018 LP Survey confirmed that 66 percent of investors surveyed said they were planning to increase their allocation to alternative investments over the next 12 months.

Preqin reported $426bn of private capital raised in 2018. Intralinks helped facilitate many of those funds being raised. Over the last 12 months, more than $1 out of every $2 raised globally for the private capital industry was done on our platform. GPs and LPs continue to rely on Intralinks for capital raising, fund reporting and portfolio company management.

And as the majority of LPs expect to increase alternative investment allocation in 2019, both new and familiar trends are emerging in the alternative investment landscape. GPs’ recent behavior indicates that transparency and enhanced technological capabilities to promote efficiency in reporting will be high priority this upcoming year.

What’s ahead in 2019? Here are three major trends I believe will impact alternative investments in the coming year.

1. Investors will continue pushing for transparency and reporting standardization

Intralinks’ 2018 LP Survey, which surveyed more than 190 investors in the U.S. and Europe, confirms that LPs will continue to prioritize transparency and reporting standardization.

Nine out of ten LPs acknowledged they set transparency expectations with their GPs before investing, either holistically or on a case-by-case basis. One way to increase transparency is with ILPA templates, which help standardize the reporting process within the private equity space and should encourage more fund managers to increase granularity when reporting on investments.

However, when asked if they had seen GPs increasingly use ILPA templates when reporting, two-thirds replied in the negative – perhaps because LPs continue not to ask for them, as opposed to managers flat out refusing to do so.

2. GPs and LPs will place greater emphasis on technology

Given LPs’ continued demand for increased transparency and enhanced reporting capabilities, we’ll see more robust reporting tools put in place by GPs. Experts anticipate that fund managers will implement growing technological advancements such as artificial intelligence to institutionalize their operations and attract more LPs.

3. Direct investment by LPs will continue to rise

More LPs are seeking to make direct investments, giving them more influence and control over their portfolios. LPs are also looking to invest directly to improve their economics on the returns and reduce fees.

According to 43 percent of respondents to the 2018 LP Survey, LPs will favor direct investing as their preferred investment method this upcoming year. Additionally, 58 percent of LPs said they planned on doing direct investments over the next 12 months, with six out of ten specifically choosing to focus on mid-market private equity. The favorability toward direct investing represents another way LPs are looking to maximize efficiency in the alternative investments space.

Conclusion

Based on our predictions, we are already looking for ways to streamline reporting and investing processes for GPs and LPs. Intralinks is dedicated to supporting the digital transformation of investor communication and we’re excited by what’s in store in the alternative investments space in 2019.



Meghan McAlpine

Meghan McAlpine

Director of Strategy and Product Marketing

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.