Institutional investors set to keep faith with private equity

Screen_graphPrivate equity investors have indicated that they were satisfied with the asset class’s performance last year and will commit more capital to it this year.

This comes despite the high level of dry powder (unspent capital) held by fund managers reaching a record high last year, which impacted asset valuations and deal-making competition.

Some fund managers are concerned that these pressures will impact future performance.

A survey of 215 institutional investors by financial information provider Preqin found that a record 84% had a positive perception of private equity, far outweighing the 3% who held a negative view of the asset class.

However, given the amount of unspent capital increasing competition and pushing pricing upwards, 14% of private equity investors have reduced confidence in in the ability of the asset class to meet their objectives. But 10% of those surveyed have become more confident.

However, almost half (49%) of investors expect their portfolios to outperform public markets by more than four percentage points, this is up from 37% in 2014 and 40% in 2015.

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