Lawyers
Global Head of Private Equity Marco Masotti spoke with Private Equity International about Paul, Weiss’s latest report on key trends in private equity fundraising. In “Scrutiny on Fund Governance Has Intensified Amid Adversity – Paul, Weiss Report,” published on July 16, Marco notes that increased concern about governance among limited partners (LPs) stems from fundraising challenges faced by general partners (GPs). “They want to know the team will remain in place when there are no realizations and no carried interest dollars being generated,” he says.
The report also found that 95% of surveyed firms expressly permit funds to enter into NAV loans, which have become nearly ubiquitous in private equity fund agreements amid ongoing liquidity challenges. “GPs are including in new funds the ability to use NAV facilities, embracing financing flexibility as a competitive differentiator for fundraising and portfolio management, rather than simply a fix in a challenging situation.” The report also showed that the number of GPs unlikely to raise another fund is growing, but not evenly distributed. While fundraising in the top end of the market remains healthy, “there are many other firms struggling to raise their next fund. They still have teams in place and portfolios with a mix of performing and underperforming assets, but they’re finding fundraising difficult,” Marco says.
The report surveyed more than 50 recently raised private equity funds, each with a minimum fundraising target of $2.5 billion.
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