In an environment characterised by low distributions, LPs are capital constrained from re‑investing with a current manager
Operating in a negative cash flow environment has become a familiar experience for LPs and perhaps it is not a surprise that nearly 80% of respondents have declined the opportunity to reinvest with one or more of their current manager(s) in the last 12 months.
When asked why re-ups have been refused, we discovered a relatively balanced distribution between reasons attributed to GPs and LP-associated ones.
On balance, performance was cited as the top factor and LP views were unanimous across all regions except Rest of World (RoW). For investors from this region, the availability of capital emerged as the main reason for opting not to reinvest.
When looking to the next 12 months, more re-up refusals can be expected. However, almost two-thirds of LPs intend to do so with only a small number of their current GPs and a further 12% don’t expect to decline reinvestment opportunities at all. This could be indicative of an improving sentiment and investor confidence across private markets.
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In this, latest edition of the Barometer, we asked a number of questions about LP approaches to re...
