The private equity industry sees some bright spots in its future, but higher-ups are clear-eyed about the difficulties “mounting pressure on fees, costs and the amount of information provided,” might pose going forward, according to a new survey out by financial software and systems vendor SunGard.
The report, “Global Private Equity Report 2015: Insights, Relationships and Technology,” was conducted by SunGard in collaboration with Longitude Research and surveyed 151 general partners (GP) and limited partners (LP).
The report finds that “with many LPs increasing their exposure to private equity and real estate in the face of low returns from traditional investments, 96 percent of GPs are considering offering funds with more diversified investment strategies in the next two to three years and roughly the same are considering raising more money.”
A strong majority of both GPs and LPs surveyed say they expect fees to fall over the next two years. On the cost front 57 percent of LPs say they think technology will help them scale up without adding staff, according to the survey.
As far as increased informational demands, 42 percent of GPs say LPs have become more demanding in terms of the information they seek, while 87 percent of LPs say they want to increase their monitoring of underlying portfolio companies.
The report notes that “the survey revealed some frustration with existing technology.” Less than a third of LPs surveyed say their needs are fully met in several areas, such as data collection, performance reporting and cash flow forecasting.
“Increased scrutiny from a number of different angles has led GPs and LPs alike to become more disciplined by using systems that allow more informed investment decisions as well as increasing transparency when reporting to investors, regulators and other key stakeholders,” says Jonathan Broch, vice president, product management and strategy of SunGard’s asset management business, in a statement. “When taking a step back, the beautiful thing is that so many of the challenges faced by the industry today can be solved with a thoughtful approach to how information is managed and used across the organization as it grows.”
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