PE firms changing role as investors look to the long-term

Author: Olly Jackson | Published: 30 Jul 2018

Private equity firms are taking a more long-term approach and moving away from three to five-year cycles. This is a sign that the sector is adapting to the demands of limited partners, as the make-up of the private equity investor adapts.

Last year, according to an Invest Europe report, pension funds directly contributed for over a third of all money raised in private equity, followed by funds-of-funds at 18%, which are commonly the route for smaller pension funds to enter the private equity sector. Pension funds have a longer investment outlook and, therefore, general partners are reacting to accommodate their demands.

"It is more a diversification of what the market is offering," said Katja Butler, partner at Skadden. "Three to five-year cycles will still remain but some have looked at the model and seen that some limited partnerships don’t necessarily need a quick return and want to look at a long-term investment cycle."...