EUROPE - No overhang, but concerns regarding returns say LPs

kimbo
15 March 2007

Tweet
Facebook
LinkedIn
Google plus
Send to

'There is no capital overhang,' according to Urs Wietlisbach at Partners Group, speaking at the EVCA Investors' Forum in Geneva on Wednesday. As Thomson revealed that nearly EUR 90bn was raised for investment last year, panelists were quick to point out that the rate of drawdown for LP commitments has increased by around 50% - an indication that the capital raised is indeed being put to work more quickly. This, however, means that LPs have to make investment decisions more quickly and with less information than they were once used to as funds return to market more quickly than ever.

These record funds can lead to diluted LP-GP relationships. "I know of one fund with 1,000 LPs," said Nick Smirensky at New York State Common Retirement Fund. A concern voiced by a number of industry panelists is that only significant investors in many funds get one-on-one meetings, with others having to rely on less intimate forms of communication. To avoid being a 'small' LP in any of its funds, Smirensky indicated that his group will focus its resources on selected groups to build strong relationships. LPs also expressed concerns with returns, saying that figures presented not only painted an incomplete picture, but also that they are not as impressive as they should be given the risk profile of the asset.