PE Data Snapshot – Data Reveals Growing HNWI Investment

SEC Data on Big Private Equity Managers Shows Growing Importance of Individuals

Some of the most striking figures in the recently published Securities and Exchange Commission’s “Private Funds Statistics” report, the first such survey since the U.S. regulator began oversight of private equity in 2012, revolve around individuals and their growing importance for large private equity managers with $2 billion or more in fund assets. Virtually all of the non-institutional investors are high net worth individuals (HNWIs) – accredited investors with more than $1 million in investable assets or annual income in excess of $200,000 – since global regulatory regimes currently prevent most retail investors from investing in private placements. The SEC report’s breadth is impressive – it covers 552 large PE fund advisors domiciled throughout the world and managing an aggregate of $1.3 trillion in fund assets. In addition to the information about individuals, it reveals much about other PE investors too.

Beneficial Ownership of PE Fund Capital Managed by Large Advisors*

Types of Investors

*Fund advisors with at least $2 billion in PE fund AUM. Data as of Q4 2014.
Source: SEC “Private Funds Statistics”, Palico SAS

Individuals Gain PE Market Share, Many Other Types of Investors See Declines

Although the survey only covers a 21-month period from the end of the first quarter of 2013 to the end of the fourth quarter of 2014, it shows 30 percent growth in the value of assets held by individuals in large private equity funds. While some of that leap from $86 billion to $112 billion is due to fund appreciation, much of it is explained by new investment by individuals. Only one group of clearly identifiable investors registered stronger growth than individuals – sovereign wealth funds increased PE assets 38 percent to $124 billion. And out of twelve investor types, just three saw their share of the aggregate capital of large PE funds rise. Sovereign wealth funds shot up to 9.7 percent from 8.7 percent, individuals climbed to 8.8 percent from 8.2 percent, and a broad catch-all category listed as “Other” increased to 8.6 percent from 7.9 percent. All other investor types were either static – the case of public pension funds at 23.6% – or declined. Banking institutions, major sellers of PE funds on the secondary market in recent years, registered the most significant fall, dropping by over a third to 2.8 percent from 4.4 percent.

Historically considered a marginal source of capital, Individuals No longer Are

Palico’s Fall Private Equity Compass, a survey of 159 managers and 92 investors, makes clear the extent to which individuals are being courted by fund advisors. Some 77 percent of managers, cutting across all regions, investment styles and fund sizes, say they have solicited capital from HNWIs. An even more impressive 87 percent say they plan to raise capital from HNWIs for their next investment vehicle.

Palico Helps Investors and Fund Managers Keep Up with PE’s Evolving Opportunities

HNWIs and their representatives, including family offices, private banks and registered investment advisors, account for 35 percent of the accredited investors who are Palico members; institutional investors of all stripes make up the balance. Whether it’s via desktop, smartphone or tablet, Palico’s marketplace helps both investors and managers find each other and keep in touch in the increasingly diverse world of private equity.

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