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All new investors class for midmarket PE firms?

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Published June 11, 2009 at 4:24 PM
moneyshake125x100.jpgWith their traditional limited partner base increasingly strapped for cash, private equity firms are expecting the the bulk of commitments for future funds to come from a new class of investors, with a target on the backs of high-net-worth individuals, according to a new study released today by accounting firm Rothstein Kass.
 
According to the firm's "Private Equity in 2009" report, which was based on interviews with 226 managing partners at middle-market private equity firms, 94% of those surveyed are interested in raising new funds. While the notion that general partners are thinking about new funds is not surprising, their ideas about where the new money will come from are. According to the survey:
 
  • 83% expect new investors to be the primary source of new capital
  • 77% think that high-net-worth investors will be an important source of new capital
  • 55% identified single-family offices as an important source
  • 43% feel that institutional investors will be an important source of new capital
Buyout shops have traditionally relied on institutional investors such as pension funds to bankroll their investment vehicles, but the economic downturn has many of them now looking farther afield. The opportunity is especially acute for middle-market LBO shops that typically raise smaller funds.

Middle-market private equity firms have been hit as hard by the credit crunch as their larger brethren. With plenty of money in their coffers and the ability to get some (but not too much) financing done, dealflow and fundraising in the middle market has been stronger than many expected. - George White
 
See Rothstein Kass press release
See TheDeal's "Soul of the Middle Market" special report
See Dealwatch on PE/VC fund raising



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