Half of European GPs to launch new strategies in 2019

Family offices and HNWIs are expected to gain importance as a source of capital, according to an IPEM survey.

A raft of general partners will launch new fund strategies this year, according to research from IPEM.

Just under half (46 percent) of European GPs expect to do so in 2019, according to the private capital marketplace’s Private Equity Pan-European Survey 2019. Spanish managers are particularly ambitious, with 65 percent of members of the Spanish Venture Capital & Private Equity Association plotting such an expansion.

Last year saw a number of European GPs take the plunge with new strategies. London’s BC Partners launched a real estate division and IK Investment Partners began raising its first dedicated minority stake fundPermira also collected $1.3 billion towards the $2 billion target it set for its debut growth fund.

Demonstrable track records are key to winning limited partners around to strategy expansions, Rhonda Ryan, head of European private equity and debt at advisory firm Mercer, told Private Equity International. 

“If you’ve known the GP for some time there’s going to be a certain level of trust, but there still needs to be some proof of concept, such as building out the team. In some cases people might say we’ve moved up in size over recent years and will raise a fund closer to our original strategy.”

A majority (61 percent) have fundraising plans this year, a figure that climbs to 75 percent for Spanish GPs. Half of the respondents with fundraising plans expect to raise more capital than in the previous fund, with only 5 percent planning to raise less.

Not all managers are quite so bullish: 35 percent do not consider 2019 to be a good year for fundraising. A slowdown in growth, high valuations and market volatility were cited as the top economic concerns for European private capital. Fallout from Brexit and protectionism or trade wars were seen as the largest external threats.

More than half (55 percent) fear a major economic correction this year.

Family offices and high-net-worth individuals will be integral to any fundraising efforts: 48 percent of European GPs expect them to gain importance as a source of funds in 2019. Banks are expected to decrease in importance by 44 percent of respondents, with 19 percent saying the same of funds of funds.

The report surveyed 383 GPs, including 142 from the UK, 59 from Belgium and the Netherlands and 43 from Germany and Austria.

IPEM will be held in Cannes’ Palais des Festivals from 22-24 January.