PE Tech Report


Like this article?

Sign up to our free newsletter

Only 26 per cent of investors expect long-life PE structures to gain popularity within five years

A new report by Intertrust has found that only 26 per cent of investors expect to see long-life private equity fund structures – which have a term of between 15-20 years and charge lower management fees – rising in popularity over the next five years.

The report, which details the findings of a recent survey of 142 private equity professionals, identified that almost 60 per cent believe greater flexibility to invest in portfolio companies for longer periods to improve returns is a driving factor in the growth of long-life funds. 
A further 34 per cent stated that they have a greater ability to invest in sectors delivering longer term investment horizons. In contrast, 38 per cent of investors expect to see short-dated funds with term limits of between three and five years grow in popularity.
Paul Lawrence (pictured), Global Head of Funds at Intertrust, says: “A maturing industry is resulting in more experimentation with fund structures. Short-term funds are popular among new managers attracting LPs who are cautious of locking up their capital for a decade or more in an untested strategy.
“Conversely, long-life funds are under less pressure to deploy capital and can hold portfolio companies for a lot longer, but investors want to see a successful track record before committing.  The bottom line is that fund structures need to reflect the alignment of GP and LP interests.”

Like this article? Sign up to our free newsletter