*Hover over pie chart for percentages
The Investec Private Equity Fund and Partner Finance team focuses on the financing needs of leading private equity professionals, investors and funds. Investec offers a broad range of financing facilities tailored to the unique requirements of the private equity sector.
Typically, the loan sizes are greater than £3 million and are secured against the private equity investments, management company cash flows or investor commitments.
Simon Hamilton comments: “It is encouraging that the personal motivation, through carried interest, is still considered achievable by most GPs and future carry represents the main driver of personal wealth creation. However, GPs do face some challenges, from partnership succession planning to how they motivate their team when they do not think they will raise another fund. They also have to consider how, with the general slowdown the industry has seen in carried interest being returned, they will fund their personal commitments to the funds.
“Given the current economic environment we are seeing more GPs and others involved in the private equity sector looking at ways to raise finance for a variety of different purposes, including investing in current and future funds, succession planning within the partnership and employee incentivisation programmes..”
Simon Walker, BVCA Chief Executive, comments: “While these findings are encouraging, the private equity industry is still facing a testing time. From access to debt, the impact of the recession on portfolio companies and the threat of European regulation of private equity, any grounds for cautious optimism must be weighed against the challenges facing the industry over the next few months and years. However, with the right support from policymakers and continued LP confidence, private equity will continue to outperform other asset classes, grow companiesand create jobs.”
Investec’s research also reveals that the main priority for the next 12 months for private equity professionals is ensuring good portfolio management. This is followed by finding new investments and looking to make exits. Restructurings and refinancings were cited as being of the lowest priority, perhaps as a result of increased optimism about the outlook for the economy and many refinancings or restructurings already having taken place in the past 12 months.
Chart 4: Which of the following best describes your expectation for the UK economy over the next 12 months?