GLOBAL - Claims private equity fundraising has suffered aftershocks from the summer's credit crunch have been played down by industry professionals.
Jane Welsh, senior investment consultant and head of private equity research, Watson Wyatt, said pension funds had not discarded the asset class, but were being more cautious in their selection of managers.
Welsh said: "Investors know they can't second guess the market fluctuations and they realise private equity is a good long term investment."
She continued: "However, we have seen more in terms of manager scrutiny as pension funds appreciate any deal must add value to the underlying company to see a sustainable benefit in any forthcoming tough environment."
A spokesman from the British Private Equity and Venture Capital Association (BVCA) told Global Pensions 2008 would be a tough year for the industry.
He said: "The credit crunch, along with the possible slowing down in the real economy, will have an effect on the industry. The extent of the impact on the level of funds raised and performance remains to be seen."
Since the credit crunch, some of the large investment banks which provided leverage to some of the so-called "mega deals" have been hit with liquidity issues, leaving some transactions waiting for completion.
Preqin's figures revealed there to be 361 more funds seeking a further US$302bn in backing than at the same period last year.
Welsh confirmed some larger deals had stalled due to liquidity issues.
She added: "Some pension funds are still nervous of committing to these major deals and their impact on returns, but there is still a good deal of interest in private equity from the US, Europe and Australia."
The BVCA concluded: "Private equity has continued over a number of economic cycles to provide superior returns to its investors."
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