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Alternative Market Briefing

Private equity fundraising to see slower growth this year

Monday, February 25, 2019

Laxman Pai, Opalesque Asia:

The unprecedented activity which has characterized the private equity industry in recent years is likely to slow in the months ahead, said a report.

According to 2019 Preqin Global Private Equity & Venture Capital Report, although fundraising has exceeded $400bn annually since 2014, high pricing is putting pressure on future returns and distributions have slowed, leading some managers to reduce their targeted returns.

At the same time, both the fundraising and deals marketplaces are more crowded than ever before, making it particularly challenging for fund managers without an established track record.

Nonetheless, investors remain committed to the asset class: with concerns about a wider financial market correction remaining, the long-term performance and diversification offered by private equity are particularly appealing.

"2019 looks like it might mark the end of the unprecedented boom in fundraising we've seen in the past few years. The flood of capital and participants that have entered the industry have put pressure on pricing, and this has a knock-on effect on future returns that we may already be seeing emerge," said Christopher Elvin, Head of Private Equity.

He added: "With concerns about a market correction on the minds of many investors and liquidity reducing, investors are likely to exercise caution in terms of where and with which firms they deploy their capital."

Future returns from private equity funds ar......................

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