The global economic crisis has churned up the private equity world, not only for PE firms but also for the primary investors in the asset class. A recent Wall Street Journal article looked at how a ranking of the most influential European private equity investors reveals a seismic shift in power, now that private equity funds are no longer oversubscribed and investors can be pickier about their investments.
The industry in general still has broad appeal, given its ability to deliver above-average annual returns. Some major investors have actually boosted their allocations to it. However, the credit crunch and fall in asset values means that the rate at which private equity firms have been able to exit their portfolio investments has slumped since its peak in 2006-2007.
“The losses experienced in the industry have not been as extreme as those suffered in other asset classes,” said Vincent Gombault, managing director of funds of funds at Axa Private Equity. “Of course, given the conditions in the market, many private equity companies are waiting for the right time to put their money to work. While some investors are impatient, many understand and support the need to wait for the most apposite time to invest.”
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