Both general and limited partners expect fees paid to GPs to fall over the next two years, according to a survey conducted by SunGard and Longitude Research.
Of the 151 GPs and LPs questioned for the Global Private Equity Report 2015: Insights, Relationships and Technology, 80 percent of GPs expected fees to drop compared to 75 percent of LPs. For GPs 90 percent believed that fee structures would be simplified, compared to 80 percent of LPs.
In terms of fundraising, 54 percent of GPs expected to definitely raise more money in the next two to three years, while 41 percent said it was possible.
The vast majority of GPs are considering offering funds with more diversified investment strategies in the next two to three years, including 57 percent that would definitely do so and 39 percent that have it in mind.
None of the funds responded ‘definitely not’ to either fund raising question.
About three quarters of GP respondents characterised the regulatory environment as ‘somewhat challenging’, while only 9 percent said it was very challenging today, rising to 16 percent in the next two years.
From a GP’s perspective, 42 percent said LPs are demanding more information and they have had to commit more resources to the task, while a third said some of those requests were unrealistic in terms of the type and the depth.
LPs continued to complain that data they receive from their GPs is patchy or inconsistent and they lack the resources to exploit it, the report said. Of the LPs questioned, 87 percent said they wanted to increase monitoring of funds’ underlying portfolio companies, although a similar percentage expressed confidence in their ability to do so and agreed that they had a high degree of visibility into underlying portfolio companies.
LPs surveyed were broadly happy with the detail of data supplied on underlying holdings, risks and the level of analysis they were able to conduct across their PE portfolio, and 71 percent agreed that GPs were more proactive in supplying information.
One reason LPs are seeking to reduce the number of GPs they are invested with is to obtain more data on their investments from a small number of clients, the report said. LPs are looking to reduce costs, and 57 percent of them said technology would help without adding staff. The report said 11 percent of LPs admitted that their staff were struggling with existing workloads and that 23 percent planned to increasing staffing levels.
Respondents to the survey were equally split between GPs and LPs, with roughly a third from the US, a third from Europe, a fifth from Asia and ten percent from Latin America.