One in Five Private-Equity Managers Will Fail, Coller Poll Says
Investors’ selectivity and concern about returns will drive 20 percent of private-equity managers out of business, according to a survey by Coller Capital Ltd.
The Global Private Equity Barometer, published today by London-based Coller, found that one in five firms won’t be able to raise another fund within the next seven years. The study polled 110 private-equity investors around the world.
Pensions, endowments and sovereign funds, known in the industry as limited partners, are looking to pare their number of relationships, Coller partner Frank Morgan said in a telephone interview. The global financial crisis, triggered by the September 2008 failure of Lehman Brothers Holdings Inc., left private-equity funds unable to liquidate investments and eroded returns for the industry.
“People are going to be more cautious and selective,” Morgan said. “They’re going to concentrate a greater amount of money to fewer managers.”
About 27 percent of those surveyed plan to increase their allocations to private-equity funds in the next 12 months, while 12 percent predicted they’ll reduce commitments. Managers are hitting the road for new pools amid a more stable landscape.
“These funds have recovered better and faster than people expected,” said Morgan, whose company buys investments from private-equity firms.
To contact the reporter on this story: Jason Kelly in New York at jkelly14@bloomberg.net
To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net
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