Survey: Pensions and PE Have Misaligned Interests

(May 18, 2010) — A new survey by IE Consulting shows a majority of pension funds believe misalignment of interests with their private equity managers (GPs) has become more blatant during the crisis.

While two-thirds of the schemes surveyed thought the crisis had caused fund managers to act at odds with limited partners’ interests, three-quarters of the pension funds felt their private equity managers had tried to blame the financial crisis for their own investment mistakes.

Additionally, 61% of respondents said they will or have already declined to invest in a new private equity fund vehicle launched by certain managers with whom they had previously invested, as a direct result of poor communication or lack of transparency during the crisis.

Looking ahead, respondents to the survey said the fundraising environment would become increasingly tough, when private equity managers (GPs) will face more difficulties raising a new fund in the next two years.