Data snapshots: Sponsors lean on sub lines, wait for break in the clouds

Private equity sponsors are more dependent on subscription lines this year, despite a series of supply side shocks to the market for the instruments, according to a new survey from workflow automation provider Passthrough.

Passthrough’s survey was conducted in June, and represents the answers of 101 US-based respondents who work in a variety of positions.

‘Challenging’ environment, but GPs express sanguinity

Respondents were also sanguine about near-term prospects for fundraising, despite 79 percent of them also reporting they find the current fundraising environment challenging.

In stark contrast to the broad feeling that the fundraising market is tough, not only are most respondents confident that they will hit their fundraising targets in the next fiscal year, but nearly 46 percent said they increased their target fund size, and some 69 percent said market conditions have meant they will close their fundraises sooner than their targets.

That result is even more surprising given that about 55 percent said it is more difficult to attract new investors now.

Fundraising was dismal in the first half of this year – affiliate title Private Equity International reported a year-on-year plunge of almost 50 percent.

How do GPs expect to meet these lofty goals amid such a difficult market backdrop? By offering more investor-friendly terms, relying on existing investor relationships for additional commitments, and – despite the difficulty attracting new investors – diversifying their investor base, among other strategies. (No respondents said they were implementing new investment strategies to meet fundraising challenges.)

Fueling some of that optimism, perhaps, is that most managers think the investor pool will include more investors from a wide range of backgrounds, including more international investors and retail investors.