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Institutional investors pose renewed confidence in private equity- report

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January 14
2:43 AM 2014

The confidence of institutional investors in private equity was renewed in 2013 as they contribute $216.56 billion to private equity funds in the US, WSJ's Private Equity Beat reported. Citing data gathered from DJX LP Source, the research unit of Private Equity Analyst publisher Dow Jones & Co, the report said the figure represented the highest level of contributions from institutional investors since 2008.

The private equity was able to restore confidence from the asset class after a banner year of distributions. Compared to the fundraising volumes posted in 2012, last year's volumes increased by almost 15%.

Last year, US corporate finance funds which encompassed buyout funds, industry-focused, diversified private equity, restructuring and distressed debt funds and real asset vehicles, increased from the previous year's levels by 17% to $162.19 billion, the report said.

Bigger buyout funds were also embraced by investors, propelling the total buyout volume to $74.17 billion in 2013, representing a rise of almost 23% over the previous year's figures. Around 45% of the overall buyout funds raised last year came from funds managed by Apollo Global Management, Bain Capital, Carlyle Group, Kohlberg Kravis Roberts & Co and Silver Lake, the report said.

 Aside from pouring capital into buyout funds, a lot of investors also made bets in funds that focus on distressed debt and helping companies turn themselves around. Distressed and restructuring funds were able to raise $36.64 billion last year, representing an increase of almost 35% in the total of the previous year, the report said.

Even if distressed debt managers are having difficulty getting deals at good valuations because of the strong equity markets and the profusion of cheap debt, investors seem to be hoping that this state of events will not be prolonged.

Limited partners also supported mezzanine funds in 2013, with 33 funds securing $14.50 billion in 2013, a 22% increase from the previous year's total, the report said.

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