Demand for private equity has never been greater among institutional investors. Yet because limited partners (LPs) have been cash flow positive on their positions for the past eight years, their biggest challenge is keeping up with their gains. More than 90% of those surveyed by Preqin said they want to maintain or increase their capital contributions to private equity in coming years, but 60% of them reported being below their target allocation to the asset class. Distributions have been so robust, and competition for new allocations so fierce, that LPs have been unable to recycle gains fast enough.
Bain partner Hugh MacArthur is a director in the firm’s Boston office and head of Bain’s Global Private Equity practice.
Deal count declines, but value jumps to a five-year record.