Private equity fund structures to morph amid investor cynicism

Michael Bow
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CYNICAL investors are driving a rapid change in how private equity firms structure investments and raise money, a fresh survey out yesterday shows.

Over half of the 156 executives polled said private equity investors – so called limited partners (LPs) – were demanding more information and greater oversight of investments made by firms during the fundraising process, according to the Grant Thornton study.

And firms are increasingly looking to offer better deals to investors to lure more cash into their funds.

About 56 per cent of respondents predicted a boom in the use of alternative fund structures between now and 2016, with over a third of firms saying they were considering co-investment opportunities to attract investors, the poll found. David Menton, managing partner at Synova, which raised a £110m fund in August, said: “It was very evident that some of the more sophisticated LPs we met had that execution capability.”