Lean Times for New PE Managers | Chief Investment Officer

(April 5, 2013) -- Fundraising for first-time private equity managers has hit its lowest point since the financial crisis, according to Preqin data.

For the opening quarter of 2013, 28 private equity funds that reached final close were from first-time managers, out of a total of 129 closed funds. While these emerging managers closed 22% of total private equity funds, they only raised 6% of aggregate capital.

"Private equity fundraising in the first quarter of 2013 was relatively robust, with the total capital raised expected to be at similar levels to Q1 2012," said Helen Kenyon, a senior manager at Preqin. "First-time fund managers, however, struggled to attract significant levels of investor capital in the quarter … Though this is concerning news for managers seeking to raise capital for their first fund, many investors remain open to investing with emerging managers, with 46% indicating that they will invest, or will consider investing, in first-time funds in 2013."

A full half of the investors Preqin polled in December 2012 said they would not invest in first-time managers, while 39% had plans to do so. The survey showed investors' attitudes towards newcomers had become more positive since the close of 2011, when just 18% planned to allocate to them.

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From a fundraising perspective, two of the most successful emerging-manager led funds to close in the first quarter were Geneva Star One ($250 million) and NorthEdge Capital Fund ($319 million), which beat its target by $15 million.

This data dovetails with a number of other surveys and research papers indicating institutional investors' preference of late to allocate into the private equity establishment. In February, another set of Preqin data showed investor interest in large to mega private equity buyout funds had picked up sharply. Likewise, the average size of secondary private funds at their close has nearly doubled in one year.

Established managers may well have a good year ahead for fundraising: only 14% of the investors Preqin polled said they plan to commit less capital to private equity in 2013 than they did in 2012.

(April 5, 2013) — Pensions, sovereign wealth funds, endowments, and foundations are the largest group owning assets invested in Hong Kong’s burgeoning hedge fund sector, research has revealed.

These institutional investors own 40% of assets invested in hedge funds in the region, with the largest allocation invested by pension funds at 11.7%. Endowments and foundations were the next largest allocators to the sector, with 10.8%. The figures were published by the Hong Kong Securities and Futures Commission (SFC).

The largest allocators overall were high net worth individuals and family offices, responsible for 22.6% of the market, followed by other hedge funds and funds-of-funds with 21.1%.

Total hedge fund assets under management in Hong Kong expanded from $63.2 billion in 2010 to $87.1 billion at September 30, 2012, an increase of 37.8%, the commission said. The number of hedge funds managed by SFC-licensed managers in Hong Kong increased from 538 in 2010 to 676 by September 30, 2012.

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In terms of geography, US investors were keenest on Hong Kong’s hedge funds.

“Americas remained as the biggest source of investors, representing 42.6% of the total assets under management managed in Hong Kong as of September 2012. European Union investors’ share fell to 18.6% in 2012 from 24.3% in 2010,” the report said.

Smaller Hong Kong-based hedge funds have been gaining popularity too, which bucks a trend seen more widely around the world.

“The top 50 hedge fund managers accounted for 73.5% of the total assets under management as of September 2012 compared to 78.2% as of September 2010. Among the top 10 managers, two were fund of hedge funds managers,” the report said.

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