2017/2018 GP Trends report

 

The Investec Fund Finance GP Trends survey, which we’ve run annually for eight years, gives general partners and advisers invaluable insights on the shape of the private equity industry.

Our 2017/18 report is launched at a time when some of private equity’s pioneers have begun to look at retiring, leaving the industry they founded in the hands of a new generation of leaders.
 
Our research shows that 20% of firms expect a succession event in the next five years but they don’t yet have a plan in place; our previous survey found that 45% of the survey participants believe that their investors aren’t happy with their succession plans, or lack thereof. 

But despite the upheaval of an oncoming wave of succession issues, and the pressure of increased scrutiny from both politicians and investors in private equity funds, individuals working in private equity remain upbeat.

There’s an increased optimism in the market with regard to the achievable targets for fundraising, coupled with an expectation that these larger funds can be raised on a timetable with pre-financial crisis vintages.
   
20%
number of firms that expect a succession event in the next five years but they don’t yet have a plan in place.
3.3%
Modified average fund commitment, across our entire sample, once outliers have been removed.
More than 90% of participants in this year’s study are at least as happy as they were in their careers 12 months ago.
The generally high level of confidence around fund raising into 2018 sees 37% of general partners anticipating their next fund to be larger, with the 2017-18 vintage feeling that market conditions are as favourable as they have ever been.

And as fund sizes grow, the size of GP commitments to those funds are expected to increase in lockstep to them – with the traditional 1-2% investment from the management team into its own funds not enough to satisfy today’s LPs. Removing the outliers, we find a modified average fund commitment, across our entire sample, of 3.3%.

Another interesting topic our research uncovered was that women working at GPs are likely to be less confident than their male peers in their long-term career prospects – with females more likely to be considering leaving their current firm than their male counterparts.

 
About the research
 
A sample of 292 private equity professionals from across the globe participated in this edition of the Investec Fund Finance GP Trends survey. In addition, we were provided with in-depth additional insights from longer conversations with 11 individuals from the sector.

The research for this edition was conducted in conjunction with MJ Hudson, a leading provider of research and other services to the private equity industry.