Private equity bosses bullish
Article Date: Nov 09 2009
Fund managers are optimistic for 2010
Four in five private equity fund managers expect to profit personally from their current funds, according to research among 120 senior private equity professionals.
Some 83 per cent of respondents anticipate receiving a share in the profits of their funds, known as carried interest, finds the research from Investec Private Equity Fund and Partner Finance, an arm of Investec Private Bank.
One year on from the collapse of Lehman Brothers, only 6 per cent of private equity professionals say their next fund will be smaller than their current one, while 37 per cent claim it will be bigger. However, the priority for the industry is managing current portfolios, as opposed to making new investments, seeking exits, or carrying out restructurings or refinancings, claims the study.
Simon Hamilton, an adviser at Investec Private Equity Fund and Partner Finance, believes the research is good news for those who invest in private equity funds as well as for employees of private equity-owned companies.
Says Hamilton, ‘The UK private equity industry is in a relatively upbeat mood despite challenging market conditions. There is also an encouraging level of optimism about future fundraising abilities both in the near and long term.’
Respondents’ optimism extends to the wider economy, with 80 per cent expecting conditions to improve or remain the same over the next 12 months.
But Simon Walker, chief executive of private equity lobbying organisation the BVCA, says the private equity industry is still facing a testing time.
Adds Walker, ‘From access to debt, the impact of the recession on portfolio companies and the threat of European regulation of private equity, any grounds for cautious optimism must be weighed against the challenges facing the industry over the next few months and years.’
Respondents to Investec’s survey were mainly from mid-market firms, with 17 per cent of responses from professionals managing funds greater than £1 billion.
