PE fund operations increase in importance

Strong demand from LPs is driving further emphasis on operations.

The private equity industry is more operationally-focused today than three years ago due to limited partner demands, according to a survey by digital fund administrator SS&C.

In total, 88 percent of respondents said they are more operationally focused now than in 2014. One-third of participants said LP demand had driven the change, while reporting requirements was the second most commonly cited factor.

Looking forward, almost half of respondents said regulatory change is expected to have the biggest impact on private equity, while 27 percent said transparency issues would be an influencer.

The majority of participants – 85 percent – said a strong management team was the most important reason for selecting a GP. This was followed by governance and controls, and fee transparency.

In terms of strategy, credit is seen to have the biggest growth opportunity in the future, according to 40 percent of participants, followed by buyout and venture capital (35 percent), real estate (13 percent) and infrastructure (12 percent).

As previously reported by sister title Private Debt Investor, investors and consultants expect a 17.4 percent increase in private debt – compared with a 3.8 percent in private equity and a 3.7 percent in infrastructure.