- Investors (through bodies like ILPA) need to do more to defend private equity, LPs say
- Half of LPs think the growing number of special (separate) LP accounts is bad for private equity GPs must continue improving their transparency and risk management
- Three quarters of LPs say European VC will not recover without significant government intervention
Almost half of LPs think private equity is seen by those outside the industry as a ‘bad thing’ (most of the rest believing it is seen in a neutral light). Encouragingly, about two thirds of investors think the industry’s reputation is worse than it deserves. They themselves accept some blame for this: two thirds of LPs think investors (through bodies like ILPA) should be doing more to defend the industry.
Neither do investors think that all changes sponsored by Limited Partners are good for the industry – about half of private equity investors believe the growing number of LP special accounts (large fund commitments that guarantee special terms for individual LPs) are a generally negative development.
Special accounts are seen as creating the potential for conflicts of interest between a fund’s Limited Partners. For their part, GPs must continue to improve in terms of transparency and risk management, LPs say. About 60% of LPs believe that further improvements are needed across the industry (though only about 10% of investors think that most GPs are deficient in this area).
These concerns are reflected in LPs’ views of the biggest risks facing the industry: while LPs see regulatory change and the macroeconomic environment as posing the greatest risks to private equity, GPs failing to learn from past mistakes or succumbing to strategy drift are also seen as major risks.
