- Life Sciences sector booming and more buoyant than ever
- Grant Thornton welcomes new leaders
- Victoria backs TPP and benefits of Free Trade
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- volt bank receives Australia’s first restricted ADI licence
- Grant Thornton advises Jupiter Mines on one of the largest IPOs in the metal and mining industry
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- Australia lags global average for 5th consecutive year on gender diversity
- Grant Thornton appoints lateral partner hire, Daniel Mastroianni to lead its new debt advisory service offering
- New Partners continue to strengthen Grant Thornton’s leadership team
- Diversity of thought - the missing ingredient for many family businesses
- Philip Campbell-Wilson joins the Grant Thornton restructuring team
- Continuing our commitment to retail, through our merger with GNC Group Consulting
- Mr Ian McCall Appointed as Partner of Growth Advisory Team
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- Grant Thornton appoints Anthony Beven to Partner, furthering its commitment to serving Australia’s Indigenous business community
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- Brexit export opportunities & setbacks - agribusiness comes out on top as Australia becomes gate way to Asia
- Brexit signals opportunity for Australian Fintech’s and trouble for Britain’s Fintech community
- 11 new partners boost Grant Thornton’s leadership
- Brad Savage joins Grant Thornton, marking 8th lateral partner hire this financial year
- Changes uncork competitiveness in the wine industry
- Level playing field for local retailers as Government announced low value import threshold to be abolished
- "Public Sector Productivity” – no longer an oxymoron
- Mid-size businesses recognised and supported in 2016-17 Federal Budget
- Innovators more confident to undertake research as R&D incentives in question, finally remain untouched
- Junior miners and explorers not forgotten in the 2016 federal budget
- Manufacturers match made in heaven with invigorated workforce
- Agribusiness receives critical infrastructure investment which lays foundation for continued growth in Asia
- Flex-appeal goes a long way towards workplace happiness: Grant Thornton breaks the mould
- $300bn in cyber breaches: Mid-size business welcomes Cyber Security Strategy
- Statement re: Arrium Voluntary Administration
- Arrium Limited appoints Grant Thornton as Voluntary Administrators
- Highest economic contribution; yet mid-size business goes cap in hand on budget incentives
- What women really want in the boardroom
- Biggest contributors of technology innovation go cap in hand
- Netflix tax paves way for more to come
- Digesting the prospects of GST on fresh food
- Strategic Development Fund & Minister for Mid-Size Business set to fill Government’s revenue gap
- Proposed changes to insolvency laws allow reorganising for success and welcomed news for Australian mid-sized business
- ChAFTA provides platform for mid-size business to deliver jobs and revenue
- Outlook brightest for gold juniors
- TPP creates growth beyond limitations of local market margin squeeze for professional services
- Move on from equal representation and embrace independence
- Australia slips from top spot; ranking third on global dynamism index
- Real estate investment driven by gut feeling rather than data
- Speak now or forever hold your peace on innovation
- Burgeoning Queensland market creates 7 senior appointments
- Revision of board governance vital for growth
- Grant Thornton further invests in leadership and strengthens its capabilities
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- Grant Thornton named one of the 50 'World’s Most Attractive Global Employers'
- Automation is the way of the future
- Incentives to invest in innovation hang in the balance
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- Grant Thornton named one of the Top 50 Global Business Employers
- Grant Thornton Australia announces the appointment of Jason Sorby, Partner – Operational Advisory Lead for Queensland
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- Grant Thornton named International Accounting Bulletin’s Network of the Year
2013 Global Private Equity Report
- Co-investment opportunities considered key to attracting LPs
- New LP relationships will dominate one-in-five new funds
- Fundraising sentiment improves among GPs worldwide
- Dividend recap volumes set to increase as LPs push for distributions
Private equity firms around the world are adapting to a “new fundraising road map”, according to the 2013 Global Private Equity Report, released today by Grant Thornton. Now in its third year, the report is the result of 156 in-depth interviews with senior private equity practitioners around the globe.
The report provides insight into private equity general partners’ expectations for numerous aspects of the fundraising and investment cycle. This year the report takes a closer look at fundraising and reveals how private equity firms are adapting their approach to increase their chances of a successful fundraise.
Fundraising sentiment While the private equity fundraising environment around the world is still seen as challenging, there has been a marked improvement in sentiment across all geographies since last year’s report, with more than half of the executives surveyed (54 per cent) having either a positive or neutral outlook. This compares with just a quarter (27 per cent) last year.
“There is a brighter view of the fundraising environment across nearly all the major private equity markets in the world. The percentage of respondents describing the environment as positive is up in North America, Asia Pacific, Middle East & North Africa and even Europe,” said Martin Goddard, global service line leader, transactions, Grant Thornton International Ltd.
Fund structures changing A majority of GPs around the world (56 per cent) predict an increase in the use of alternative fund structures over the next three years, as limited partners explore options beyond the traditional 10-year blind pool fund. The alternative structure most commonly cited by GPs is deal-by-deal, whereby investors are presented investment opportunities and can either opt in or out on a case-by-case basis.
Some GPs note that while there are disadvantages to most fund structures, alternatives to the limited partnership can provide a means to: tailor programmes to an individual LP’s needs; adopt a flexible approach to match market circumstances, for GPs to access carry more quickly than via a 10-year fund; and make investments in areas out of favour with LPs and which therefore would not fit in a blind pool model. In the majority of cases, GPs point to deal-by-deal fundraising as being the most common alternative to the limited partnership.
Fundraising: longer, slower, harder While there is more general positivity around fundraising prospects, there is also a recognition among the survey respondents that the process has become costlier and more onerous. Many report that the distinction between “fundraising” and “investor relations” had become more blurred and fundraising is seen more as a constant process of relationship building and reporting rather than a cyclical exercise.
Momentum is widely understood as a prerequisite for successful fundraising. An early first close on a good proportion of the target is often seen as key to how the process is perceived and, therefore, whether other LPs will feel confident enough to come on board. Much of the drive for momentum is rooted in extended LP pre-qualification and pre-marketing phases, as well as ensuring likely information requirements are prepared for ahead of the ‘official’ launch.
As well as ensuring they are fully prepared for the official launch of their fundraising, GPs are considering alternative incentives to attract new investors. Co-investment opportunities are the most commonly cited strategy. With the power shifted to the LP, GPs are reconciled to accepting new demands or offering incentives and concessions (fee discounts, advisory board seats, co-investment rights, etc), encouraging LPs to commit, especially ahead of the important first close.
When asked to compare their most recent fundraise with previous experiences, private equity firms most commonly cited the amount of due diligence by prospective LPs as an area where the process had changed. The time it takes to push investors over the line and the sheer number of LP meetings, were also areas where changes were noted.
In Asia Pac 80% of private equity firms expect to be on the fundraising trail within the next 12 months. More firms than ever (22 %) expect their funds to be dominated by new LP relationships.
In Asia Pac the source of new LP’s was focussed both domestically and interestingly Europe with family offices, soverigh wealth and superannuation funds being targeted.
Dividend recaps set to rise By far and away the most common “pressure point” in the GP-LP relationship is the question of distributions and exits, with 23 per cent of respondents citing this as being the area of most LP pressure. This is followed by the firm’s strategy in light of market conditions (13 per cent), fees (12 per cent) and ESG policy (12 per cent).
In light of the pressure for exits, it is perhaps unsurprising that the majority of GPs (51 per cent) predict there will be an increase in dividend recapitalization activity over the next 12 months. Only two per cent expect there to be a decrease and 47 per cent expect activity levels to stay the same.
Focus on Portfolio companies In an environment of a subdued number of transaction the general sentiment was again that value creation would be driven by performance improvement.
Being active with portfolio companies was a focus for most GP’s in 2014 with strategic input particularly important in Asia Pac compared to human resources and management in Europe.
The wider private equity environment As well as assessing the market for private equity fundraising, the lobal Private Equity Report delivers an in-depth examination of prospects for deal flow, access to debt finance, exit activity and portfolio company performance drivers.
“While the results from our third annual global private equity survey indicate that there numerous challenges facing the industry remain, there appears to be signs of growing optimism amongst respondents, suggesting that perhaps we are at the dawn of a new phase of increased activity.
With the continuing improvement in debt markets in North America and the potential follow on impact this may have globally, as well as signs of positive economic news from Europe and sustained high growth rates across the Asia Pacific region, there appears to be supporting evidence underpinning these early signs of returning confidence.
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Grant Thornton is one of the world's leading organisations of independent assurance, tax and advisory firms. Grant Thornton Australia has more than 1,300 people working in offices in Adelaide, Brisbane, Melbourne, Perth and Sydney. We combine service breadth, depth of expertise and industry insight with an approachable “client first” mindset and a broad commercial perspective. More than 35,000 Grant Thornton people, across over 100 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work.
About Grant Thornton International Ltd* Grant Thornton is one of the world's leading organisations of independent assurance, tax and advisory firms. These firms help dynamic organisations unlock their potential for growth by providing meaningful, actionable advice through a broad range of services. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to solve complex issues for privately owned, publicly listed and public sector clients. Over 35,000 Grant Thornton people, across 100 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work. Grant Thornton International is a non-practicing, international umbrella entity organised as a private company limited by guarantee incorporated in England and Wales. References to "Grant Thornton" are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients.
*All references to Grant Thornton International in the press release and this “Notes to editor” section are to Grant Thornton International Ltd. Grant Thornton International Ltd is a non-practicing, international umbrella entity organized as a private company limited by guarantee incorporated in England and Wales.