GLOBAL - A large majority of the world's biggest pension funds are concerned that private equity funds are facing capacity constraints, according to exclusive research by Global Pensions.
Some 68% of the Global Pensions 100 panel were either “concerned” or “very concerned” about capacity, while just 18% of respondents were not concerned. A further 14% did not invest in the asset class.
Of those pension funds who were wary of capacity, 44% were “concerned” and a further 24% “very concerned”.
Commenting on the results, Joseph Mariathasan, one of the executive team running research-based consultancy StratCom, said: “I’m surprised that more people weren’t concerned – anyone who isn’t concerned about capacity should be.
“In private equity, the dispersion of return between the best funds and the worst funds is incredibly high. What that means is it doesn’t matter so much which area you’re in, whether it’s venture [capital] or European buy-out, as which fund you’re invested in. If you want to invest in private equity, the issue is: can you get into the best funds and what is your strategy for doing that?”
Sanjay Mistry, head of Euro-pean private equity research at Mercer, said capacity constraints varied across regions. “The private equity market outside the US has begun to in-crease, so those regions have more capacity than somewhere like the US,” he said. “If [pension funds] are investing in the US then they’ve probably got greater grounds to be concerned.”
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.