Half the LPs surveyed by research firm Cerulli Associates say that it takes between seven and 12 months to perform due diligence and make an allocation to a single fund product. For 25 percent of managers, it takes more than 12 months.
“The time required for institutions to perform due diligence and make an allocation is lengthy,” said in the report Pamela DeBolt, associate director at Cerulli. “Manager selection is a crucial component of alternative investments, and the due diligence process is time-consuming.”
The report chimes with research conducted earlier this year by Bain & Company which said private fund managers need about a year and a half in market to close their funds. All this comes despite a general uptick in the amount of capital available for commitment.
A total of $385.6 billion was raised in 2013, according to PEI’s Research and Analytics division. In 2012 the comparative figure was a considerably lower $301.1 billion while in 2011 the total was even less: $274.4 billion.