SWF investment in PE rockets

The US Securities and Exchange Commission released the first “Private Funds Statistics” report since it began its oversight of private equity in 2012, and found sovereign wealth funds and individuals increased their asset ownership in PE funds more than other investors between 2013 and 2014

The level of sovereign wealth fund (SWF) investment into private equity funds has increased more than for any other type of investor, newly published data from the US Securities and Exchange Commission has revealed.

The SEC’s Private Funds Statistics report published in October – the first survey of its kind – found that, between Q1 2013 and Q4 2014, SWF’s beneficial ownership of private equity funds jumped 38 percent to $124 billion from $90 billion.

Individuals, both US and non-US, also committed more to funds, up 32 percent to $112 billion from $85 billion in the same period. Part of the increase is due to fund appreciation but “much of it” is due to individuals’ new investments into funds, online marketplace Palico said.

According to Palico data, 77 percent of managers across all regions, investment strategies and fund sizes have solicited capital from high net worth individuals (HNWIs) and nine out of 10 plan to approach HNWIs for the next fundraising.

Pension plans, both government and non-government, also increased their exposure to $423 billion from $348 billion, according to the SEC.

Of the 14 categories of private equity investors listed, banking institutions and Unknown Non-US Investors invested less. Banks’ investment PE funds declined to $35 billion from $45 billion in the same period.

Looking globally, private equity investment in South America climbed 13 percent from Q4 2013-Q4 2014 to $85 billion and in the Middle East investment jumped 50 percent to $12 billion, while in other regions it dropped.

Investment in North America stood at $5.28 trillion at the end of 2013, falling 15 percent to $4.5 trillion a year later. Similarly, investment in the European Economic Area in 2013 was $1.42 trillion, and declined 12 percent to $1.26 trillion the following year.

In terms of sectors, the report showed that oil and gas topped the list of portfolio company investment. Gross assets in oil and gas accounted for 7.8 percent of total assets in 2013, and 7.5 percent in 2014.

The electric power generation, transmission and distribution industry ranked second and software publishers industry third.

The SEC report encompassed 552 large PE fund advisors based globally with $1.3 trillion of fund assets under management.