Private Equity Now: The LP Perspective

PDF | Research | Week of Nov 11 2024

“We believe we’re now advancing towards the stage in the cycle that is always

the most fun”

– Stephen Schwarzman, chief executive, Blackstone.

2024 Private Debt Survey

Institutional investors, RIAs, and financial advisors: We want to hear from you! We invite you to share your views on private debt and today’s environment by completing a brief 2-minute survey. We look forward to sharing the results with you in an upcoming Lead Left issue.

Take survey

Lead Left Vodcast

Everything Happens So Much (Last of Three Parts)

🔔 Subscribe to our YouTube channel: click here

Watch Now

Private Equity Now: The LP Perspective

paulo-silva-ST2TQpRiRY8-unsplash-scaled image

Over the past two weeks we’ve touched on the distribution dilemma in private equity, and most recently on the perspectives and tactics used by GPs. This week, we dive deeper into the LPs perspective and how allocators are managing private equity programs in the current environment. To quantify the issues: LPs observed a 9.5% distribution rate in 2023, well below the 2015-2019 average of 23.6% (per Private Equity International and MSCI). This trend poses a host of challenges for LPs who rely heavily on distributions.

Whether it’s meeting financial obligations of beneficiaries, funding new investments or balancing portfolio allocations, LPs must rethink their cash flow and liquidity management initiatives. Today’s dearth of realizations has LPs increasingly turning to the secondaries market as a strategic liquidity tool. This dynamic is driving LP-driven secondaries to ~$83 billion of volume in 2024, up from ~$25 billion in 2020 (per Jefferies.)...

Chart of the Week

Secondaries on the March

The growth of equity secondaries is fueled by both LP and GP liquidity needs.

Source: Jefferies

(Past performance is no guarantee of future results.)

Lead with Your Left

30-DAY FREE MEMBERSHIP

Join the leading voice of the middle market. Try us free for 30 days.

Learn More

PDI Picks

Hard-won gains can be retained

Read PDI's Report: LP Perspectives 2024 report

Respondents to a PDI survey believe that private debt will not easily give up the share it has won at the larger end of the market.

In 2022 and 2023, as talk of private debt being in a so-called ‘golden era’ grew louder, one of the main reasons was the way in which it had achieved territorial gains at the larger end of the market – promoting itself as an alternative source of finance (and sometimes as the only game in town) at a time when the broadly syndicated market had effectively pulled up the shutters...

Contact: Andy Thomson / Private Debt Investor

Leveraged Loan Insight & Analysis

Resilient secondary loans, light primary calendar carry repricing trade through October

The share of institutional term loans trading above par averaged 33% in October, advancing atop 31% in August and 32% in September. And secondary loans have traded nowhere but up through the first two weeks of November, with par-plus loans now accounting for 43% of the secondary market, a level not sustained since July...

Contact: Chris Piccirillo / LSEG

The Pulse of Private Equity

PE-backed healthcare services company count by subsegment and hold time

We expect to see three things happen in physician practice management companies (PPMs) in the next year or so. First, a few large platforms have traded recently, and a few more are close to the finish line...