Investor appetite for private equity continued unabated this year, and will only get larger in 2022.
Private Equity International’s LP Perspectives 2022 Study found that 93 percent of investors plan to invest more or the same amount of capital in private equity over the next 12 months, a 9 percentage point increase from last year.
Texas County and District Retirement System topped the list of the busiest investors in 2021 with at least 29 commitments, in line with its total number of commitments in 2020, according to PEI data. It committed $150 million each to mega-funds Hellman & Friedman Capital Partners X and Summit Partners Growth Equity Fund X, which raised $24.4 billion and $8.35 billion respectively this year.
The International Finance Corporation – second in the ranking – appears in the list for the first time with some 23 commitments in mainly growth equity and venture funds. These include African PE-focused funds Helios Investors IV, which is seeking $1.4 billion, and Adenia Capital V, which has a $400 million target. The IFC also backed Everstone Capital Partners IV, which has a $950 million target.
The 10 busiest LPs this year made at least 180 commitments to GPs. This figure, however, is 25 percent smaller than the number of commitments made by the most active LPs in 2020.
Half of the investors in this year’s ranking were not featured on last year’s list. These include State of Michigan Retirement Systems, Minnesota State Board of Investment, Massachusetts Pension Reserves Investment Management Board and Rhode Island State Treasury.
State of Michigan Retirement Systems and MSBI both backed KKR’s latest North America-focused vehicle KKR North America Fund XIII, which had a $14.3 billion first close in the second quarter and is still in the market.
Massachusetts Pension Reserves Investment Trust, meanwhile, backed 14 funds, including Insight Partners’ 12th flagship vehicle, which had raised about $20 billion as of November – nearly $8 billion more than its original target – and Providence Equity Partners’ fifth growth fund, which closed on its hard-cap of $4.5 billion.
According to Hamilton Lane’s tally, there are 15 managers targeting $15 billion next year. Assuming they only hit their targets, that will already be more than half of all capital raised for buyout funds in 2020, Carolin Blank, managing director at Hamilton Lane, said at PEI’s Women in Private Markets Summit in December.
That said, the ongoing impact of the pandemic, extreme market valuations and the threat of both recession and higher inflation are among factors that could potentially affect investors’ portfolio performance over the next 12 months, according to the LP Perspectives 2022 Study.
The higher threat of inflation is a particular concern: 40 percent of investors cite it in this year’s survey, compared with 6 percent last year.