Institutional investors reduce commitments in PE funds: Preqin

Institutional investors are exercising caution when it comes to their commitment towards private equity funds and the volume of funds raised in the second quarter this year fell by more than half to $79.7 billion over the same period last year, says a survey.

During Q2 2009, 89 private equity funds reached a final close securing $79.7 billion among them, considerably less than the $194.5 billion raised by the 274 funds to hold a final close in the same quarter the previous year, the survey by global research firm Preqin said.

"In contrast to past years where investors would be making numerous new investments throughout the year in order to maintain their allocation to private equity, in the first half of 2009 only 41 per cent of those polled have made any new investments at all," Preqin said.

 

"Investors have displayed an increasing degree of caution when approaching new commitments to private equity funds in recent months.

"The decline in the rate of distributions from portfolio funds has also meant that the majority of investors are intending to maintain the level of their exposure to the asset class. This, combined with current market uncertainty, has meant that almost half of investors have opted not to invest this year," Preqin Investor Data (Manager) Helen Kenyon said.