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Pension and insurance funds cannot get enough of the private equity market, according to the results of our latest quarterly investor survey (see pages 14).
Almost half of respondents intend to increase their exposure to private equity over the next six months and not one plans to reduce its allocation to the sector, the study found.
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This is despite the market becoming increasingly worried about the amount of debt being racked up by private equity firms. Our cover feature on the subject (see page 29) finds that Sweden’s minister for local government and financial markets has threatened to introduce a new law to force private equity and venture capital firms to disclose information about their borrowing.
But this has not slowed investors’ interest in the arena. FRR, the €28bn French Pensions Reserve Fund is to commit €1.5bn to the market, while Nordic funds are edging more of their assets into the sector. “We started investing in private equity approximately a year ago and ever since we have been expanding our activities to include a multi-branch buyout investment,” Hannu Hokka, managing director of the €920m VR pension fund, told the magazine. “Today we have almost 2 per cent of our holdings in private equity. It is a good asset class for long-term investors with decent return opportunities.”
Investors are not completely at ease, however. Our quarterly investor survey also found respondents concerned about the level of pricing in the market, about market transparency and by a lack of good managers and advice. “The [market] may become a victim of its own success,” said one consultant.
