EUROPE - Industry experts have predicted a cautious time for private equity as part of a review of the alternative investment market in the second half of 2007.
Partners Group, a Swiss-based alternative asset manager, said with high entry prices and a changing credit market, it was more cautious with regard to private equity than in the past and was carefully monitoring the trends.
It noted the buyout sector had so far been able to handle the increased inflow of money very well and that the Asian market offered significant investment opportunities going forward.
Reviewing the private debt sector, it said: “We view the current correction in this market as a necessary one, which will counteract the extreme liquidity and low lending standards seen in the first half of the year.”
Responding to the forecasts, Phil Irvine, director of advisory solutions at Liability Solutions, said the recent market volatility had highlighted the benefits of diversification to pension schemes.
Irvine said: “I think from pension schemes there is an overwhelming willingness to diversify so they are not so exposed to the risks they face.”
In terms of the outlook for private equity, Irvine said that with the scaling back of leverage he felt the outlook for M&A activity and flotations was now less positive.
He said: “On average it has been a tough time but the industry as a whole has shown it has got capital preservation properties.”
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.