It looks like GPs intent on raising new funds must show LPs recent returns. Historical performance figures may have little relevance in today’s market, according to a WSJ article. Those with stellar recent returns in the past two years are tapping a “gusher of cash”. Some of those having difficulty, include brand name fund managers.
They are raising smaller funds or putting fundraising on hold. Companies in this category include, WL Ross & Co., Providence Equity Partners LLC, and Charterhouse Group. Those doing well on the fundraising circuit are GPs like Ares Management, Leonard Green & Partners, American Securities and Centerbridge Partners.
Pension plans, sovereign-wealth funds and other investors remain “keen” on PE, an assertion that is confirmed by recent data from Preqin and it is taking less time this year than last to close a fund. But a disparity in recent returns explains why some funds are “fighting off investors while others search high and low for them,” says the WSJ. Image source: Preqin