More extensive use of credit facilities in private equity has “made a lot of historical data less useful”, says Katja Salovaara, an experienced LP and senior portfolio manager at Finnish pension fund Ilmarinen.
Listen to Katja Salovaara tell Toby Mitchenall about the effects of the facilities on investors
With private equity firms increasingly using bank facilities – variously known as subscription credit lines or fund finance facilities – to defer drawing capital from limited partners when acquiring assets, pacing investments and predicting drawdowns has become trickier for limited partners.
“The reality is that maybe you invest in a fund and you don’t have a capital call for two years,” says Salovaara. Ilmarinen, which manages around €45 billion of assets, has around 6 percent of its capital invested in private equity.
To read the full interview with Salovaara, click here.