While GPs have been generally disappointed in the performance of funds raised at the peak, private equity on the whole has still outperformed investments in the public markets. Going forward, GPs will increasingly focus on operational expertise, said co-founder of Bain Capital Josh Bekenstein.
Despite general partner disappointment with the value of investments made between 2006 and 2008, the asset class has still outperformed public markets, Bekenstein said at an industry event today.
“Funds that invested at the peak, at least those at the top five or so firms, should still see a return of over 1x,” he said at the Yale School of Management 2010 Private Equity Conference in Connecticut Friday.
“If you put that same money in the S&P 500 during that time period, you're not going to get 1x. Not even close.”
While Bekenstein said there is still plenty of dry powder and that US corporations have “tons of cash”, he added that investing it wisely will require general partners to leverage broad skill sets across increasingly diverse asset classes.
“For a traditional private equity firm, things have to change, at least on the large buyout side,” he said. “We think firms with deep vertical and operational expertise will be able to quickly capitalise on the kinds of opportunities that are out there,” he said.