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  • INVESTOR OUTLOOK FOR PRIVATE EQUITY IN 2017

    40% Our latest investor survey revealed that a signifi cant 40% of institutional investors in private equity are planning to commit more capital to the asset class in 2017 than they did in 2016. Here, we provide detailed insight into investors’ plans for the next 12 months.

    Find out more on page 3

    PRIVATE EQUITY & VENTURE CAPITAL

    SPOTLIGHT VOLUME 12, ISSUE 3 ■ MARCH 2017

    alternative assets. intelligent data.

    RECENTLY RELEASED: 2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT

    2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT

    alternative assets. intelligent data.

    ISBN: 978-1-907012-97-6 $175 / £125 / €150 www.preqin.com

    VENTURE CAPITAL FUNDRAISING IN 2016

    $55bn 2016 marked the third consecutive year whereby venture capital fundraising topped $50bn. With fewer funds closed however, the average size reached a record $166mn.

    Find out more on page 8

    SIGN UP

    Sign up to Spotlight, our free monthly newsletter, providing insights into performance, investors, deals and

    fundraising, powered by Preqin data:

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    www.preqin.com/contact info@preqin.com|

    FEATURE Investor Outlook for Private Equity in 2017

    3

    FEATURE Venture Capital Fundraising in 2016

    8

    INDUSTRY NEWS 10

    THE FACTS ■ AUM and Dry Powder ■ Investors to Watch ■ Venture Capital Fund

    Managers

    12 14 16

    CONFERENCES 18

    IN THIS ISSUE

    All data in this newsletter can be downloaded to Excel for free

    Alt Credit Intelligence European and US fund Services Awards: Best Data and Information Provider | Africa Global Funds Awards 2016: Best Research and Data Provider | The Queen’s

    Award for Enterprise: International Trade | HedgeWeek Global Awards: Best Global Hedge Fund Research Provider | CAIA Corporate Recognition Award

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  • © Preqin Ltd. 2017 / www.preqin.com3 Private Equity & Venture Capital Spotlight | March 2017

    INVESTOR OUTLOOK FOR PRIVATE EQUITY IN 2017

    SATISFACTION WITH PRIVATE EQUITY Institutional investors surveyed by Preqin in December 2016 expressed a high level of satisfaction with private equity: 84% of investors reported a positive view of the asset class at present, up from 59% two years earlier (Fig. 1).

    Ninety-fi ve percent of investors reported that their private equity fund investments had met or exceeded expectations in 2016, including 24% for which they had

    exceeded expectations (Fig. 2). The 5% that felt that their investments had fallen short of expectations was the smallest proportion in the past six years.

    In terms of longer-term performance, investors are even more positive: 40% reported that their private equity investments had exceeded expectations over the past three years, second only to private real estate (42%). Despite this, the proportion of investors that reported that

    their confi dence in the ability of private equity to achieve portfolio objectives had fallen over the past year increased from 9% to 14% (Fig. 3), possibly due to concerns about whether fund managers can continue to deliver strong returns at a time of high valuations. Nevertheless, the vast majority (86%) of fund managers reported that their confi dence in the ability of private equity to achieve portfolio objectives was unchanged or had increased over the past 12 months.

    INVESTOR OUTLOOK FOR PRIVATE EQUITY IN 2017

    9% 14%

    74% 76%

    18% 10%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    Dec-15 Dec-16

    Increased Confidence

    No Change in Confidence

    Reduced Confidence

    Source: Preqin Investor Interviews, December 2015 - December 2016

    Pr op

    or tio

    n of

    R es

    po nd

    en ts

    Fig. 3: Investors’ Change in Confi dence in the Ability of Private Equity to Achieve Portfolio Objectives over the Past 12 Months, 2015 vs. 2016

    9% 6% 3%

    33% 29%

    13%

    59% 65%

    84%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

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    Dec-14 Dec-15 Dec-16

    Positive

    Neutral

    Negative

    Source: Preqin Investor Interviews, December 2014 - December 2016

    Pr op

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    R es

    po nd

    en ts

    Fig. 1: Investors’ General Perception of the Private Equity Industry, 2014 - 2016

    19% 15% 11% 8% 6% 5%

    75% 74% 77%

    75% 64% 71%

    6% 11% 13% 17% 30% 24%

    0%

    10%

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    Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

    Exceeded Expectations

    Met Expectations

    Fallen Short of Expectations

    Source: Preqin Investor Interviews, December 2011 - December 2016

    Pr op

    or tio

    n of

    R es

    po nd

    en ts

    Fig. 2: Investor Views on Private Equity Portfolio Performance over the Past 12 Months Relative to Expectations, 2011 - 2016

    12% 19%

    8% 16%

    6% 6%

    61% 48%

    53% 49%

    43% 46%

    27% 33% 39% 36%

    52% 48%

    0%

    10%

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    30%

    40%

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    Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

    Increase Allocation

    Maintain Allocation

    Decrease Allocation

    Source: Preqin Investor Interviews, December 2011 - December 2016

    Pr op

    or tio

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    R es

    po nd

    en ts

    Fig. 4: Investors’ Intentions for Their Private Equity Allocations over the Long Term, 2011 - 2016

    Using data from the recently released Preqin Investor Outlook: Alternative Assets, H1 2017, we take a look at investor appetite for private equity in the year ahead, including allocations, strategies and geographies targeted, key issues and more.

    www.preqin.com/investoroutlook

  • © Preqin Ltd. 2017 / www.preqin.com4 Private Equity & Venture Capital Spotlight | March 2017

    INVESTOR OUTLOOK FOR PRIVATE EQUITY IN 2017

    Investor satisfaction with private equity is driving larger sums of capital to the asset class as investors look to maintain and increase their allocations. Over the longer term, almost half (48%) of respondents plan to increase their allocations to private equity, while a further 46% will maintain their allocations – these are some of the highest levels seen over the past six years (Fig. 4).

    INVESTOR ACTIVITY IN 2017 Positive investor sentiment towards private equity is set to lead to further investment in the asset class in the year ahead, as 40% of investors plan to commit more capital to private equity funds in the next 12 months than they did over the past 12 months (Fig. 5). Although this represents a small decrease from 43% in December 2015, the proportion that plan to invest less capital

    over the next 12 months has also fallen over the same period, from 13% to 11%.

    With 89% of investors looking to invest the same amount or more capital in private equity in the next year, over three-quarters (76%) plan to make their next commitment in Q1 2017 and 7% intend to do so in Q2 (Fig. 6). A further 11% plan to invest in the second half of the year, with only 6% expecting to wait until 2018 or later for their next commitment.

    Investors are increasingly spreading their investment across a number of funds, with the proportion of investors that plan to commit to fi ve or more funds over the next 12 months increasing from 43% in the H2 2016 Investor Outlook to 51% at present (Fig. 7). Similarly, the proportion that intend to make just one or two

    investments has fallen from 34% to 26% over the same period.

    However, despite investing across a larger number of vehicles, for the majority of investors, the intended capital commitment to the asset class remains small: 52% of investors plan to invest less than $50mn in private equity over the next 12 months (Fig. 8). Nevertheless, a small but important group of investors will be making large commitments over the coming year: 13% of investors plan to invest $500mn or more in the asset class.

    STRATEGIES AND GEOGRAPHIES TARGETED As investors seek to commit greater sums of capital to private equity over the coming year, they continue to identify small to mid- market buyout funds as the most attractive

    52%

    10%

    18%

    7%

    13%

    Less than $50mn

    $50-99mn

    $100-349mn

    $350-499mn

    $500mn or More

    Source: Preqin Private Equity Online

    Fi

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