Investors are preparing to inject more cash into the private equity industry this year

William Turvill
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European investors were found to be more bullish than North American counterparts (Source: Getty)

Investors are planning to increase investments into the private equity this year, meaning further growth in the industry, new research out today found.

Some 44 per cent of limited partners (LPs) surveyed by Rede Partners said they intend to deploy more capital this year than in 2016, a record year for fundraising volumes, while 11 per cent said they would provide less.

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The Rede Liquidity Index (RLI), launched today, aims to measure the health of private equity in the same way of the Purchasing Managers’ Index (PMI), with a baseline score of 50 representing no change and a score above this indicating an intention to increase investment.

European LPs were found to be more bullish, with a score of 71, than North American counterparts, who were on 56, when it came to primary funds. However, UK LP sentiment was found to be more in line with the US, with a score of 59.

Rede also identified a significant variation between different types of investors. Asset managers scored 72, just ahead of insurance firms on 71, while pension funds were down at 50.

“It’s clear that investor appetite towards private equity remains strong and that major institutional investors view the asset class as an attractive place to put their capital to work,” said Scott Church, a partner and co-founder of Rede.

The long-term nature of the asset class provides a degree of insulation from widespread economic and political uncertainty while providing significant market opportunities in which investors can generate attractive returns.

While not all LP groups are equally bullish, the fact remains that the industry looks set to continue to attract significant inflows throughout 2017.

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Rede also found a strong appetite for LPs seeking new relationships with general partners (GPs), with 40 per cent intending to increase commitments to new managers this year.

“The ongoing maturation of the industry, coupled with its strong performance, means that most LPs continue to look for strong new manager relationships best positioned to address the market environment of today,” said Adam Turtle, partner and co-founder of Rede Partners.

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