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."...