PE HUB: Finding Returns is Difficult

Commentary from PE HUB, 30 January 2012:

 I’ve been working on a theory that private equity fundraising is being hampered by the absence of “the next big LP.” In other words: The industry super-sized after public pensions got involved. Then there was a big expansion to Europe. Then to Asia. Then, most recently, to the Middle East and related sovereign wealth funds. Through it all, PE firms could say to existing LPs: "Decide quick, because there's a big pot of money eager to get into the space.

So I’ve been tossing this out there to various sources, and am getting a mixed reply. Here’s an example of dissent, from a PE placement agent: “There is still a ton of new money coming into the PE market from Asia, especially with new sovereign investors in China and Korea. What is different about this money (as well as the increasing Middle East oil wealth), however, is that it is much less likely to target investing in funds and many of these investors are more focused on separate accounts, co-investment and even in some cases direct investments. In the long run GPs have to wonder if these are customers or competitors.