LPs seek new sweetspot as attitudes shift

In marked contrast to the past few years, when many LPs struggled to access 'top-tier' mega-funds, attitudes are shifting in favour of funds in the lower- and mid-market. A recent survey of 130 global LPs conducted by placement agent Almeida Capital revealed that large buyout funds are now deemed less attractive (44%) than small or medium-sized funds* (both 77%).

"LPs have spent two years investing heavily in mega-funds, so looking elsewhere is a natural next step," said Almeida CEO Richard Sachar. The survey also revealed that nearly half of LPs are looking to build new relationships with GPs they haven't previously invested in. "This is probably a doubling of what the figure would have been a year ago," Sachar said. "LPs were extremely busy re-upping over the past 12 months so now many are looking to rebalance their portfolios. It marks a big change in the market." The study also revealed that nearly half of those surveyed intend to allocate more than $250m in 2008.

And the survey says...

- 50% of LPs to maintain allocations; 42% to increase;

- Small and mid-sized buyouts most attractive (77%); large waning in popularity (44%)*;

- 47% to invest at least $250m in 2008; 24% to invest at least $500m;

- 92% intend to maintain (50%) or increase (42%) their allocations in 2008.

Source: Almeida Capital.

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