INSTITUTIONAL INVESTORS

Institutional Investors Knowledge Center

Dec
7
2009

What are Institutional Investors Saying About Private Equity?

By SEI Knowledge Partnership

White Paper: Private Equity Investors – Committed Yet Concerned (PDF, 15 pages, 2MB)

The global financial crisis of 2008 brought the booming private equity market to a halt. Illiquid markets, cash-strapped investors and the scarcity of credit conspired to bring a multi-year bull run to an end. As confidence, economic stability and liquidity returned in 2009, public markets rallied sharply. Private equity activity, however, remains sluggish.

The SEI Knowledge Partnership surveyed institutional investors in order to gauge their sentiment regarding their private equity investments. The survey was completed by senior investment professionals at 51 organisations ranging in size from less than US $500 million to more than US $20 billion in assets. Most participating organisations were foundations, endowments, or public pension funds.

"Private Equity Investors – Committed Yet Concerned," provides valuable information for private equity managers about institutional investors’ current behaviors, motivations, and concerns. For instance:

  • Nearly 20% of institutional investors plan to increase allocations to private equity next year, while a large majority plan to hold allocations steady.
  • Portfolio transparency and the quality of investor reporting and communications are more important than fees when selecting a manager.
  • Investors’ top concern is liquidity risk, but 22% also worry about headline risk.