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Investors selling out of buyout funds at record pace

Pension funds are among those investors that sold a record $33 billion of private fund investments in the first six months of 2022, according to a report by The Financial Times.

Partly triggered by the recent steep decline in stock markets, investors are now selling stakes in PE and VC funds at the fastest pace on record, as the downturn in equities spreads to the private markets.

The report cites data from Jefferies as revealing that H1 sales of stakes in private funds jumped to $33 billion from  $19 billion in the same period in 2021, with sales typically bine made at below face value.

The sell-off follows a decade of surging allocations to private markets, which have grown in influence since the financial crisis and cover everything from buyout firms to venture capital and real estate funds.

It casts doubts on the ability of these groups to sustain the fundraising that has transformed them into a major force in global dealmaking.

The report says that steep stock market declines mean many pension funds feel their portfolios have become overexposed to private investments including buyout funds, VC funds and real estate funds. And with the the rapid pace of deal-making seen over the past two-years, which has seen investors having to make good on their capital commitments far more quickly than expected, some are now fearing a funding squeeze that would leave them unable to meet future capital calls.

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