No LP Directs Boom Expected


December 4, 2014

There has been speculation on growth in the pool of capital available for direct deals by institutional investors and LPs (see earlier Digest article here). Some clarity is offered in a new report published by WEF. It says that growth in direct deals is not likely to grow at a much higher rate over the near to medium term because the “most important” changes by institutions (LPs) into direct investing have already taken place. And while some types of institutional investors, such as Sovereign Wealth Funds and multi-Family Offices, are expected to increase allocation to direct private equity, infrastructure, real estate, and other alt assets, the overall value of directs is expected to increase at the same pace as growth in Assets Under Management (AuM). The report concludes, “Over the near to medium term direct investing is likely to grow only slightly ahead of overall institutional asset growth.” There is currently about USD 700 billion of direct investment AuM worldwide, according to the report (The graphic here shows how the figure was calculated.

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