Urs Wietlisbach: Today is an LP market

The executive vice chairman of Partners Group believes the US fundraising market will be most affected by the current global financial crisis. He also reckons LPs will begin to push for changes on terms and conditions.

How will the global financial crisis affect private equity fundraising over the next 12 months? Urs Wietlisbach, executive vice chairman of Swiss alternative investments firm Partners Group, said:

Urs Wietlisbach

“As seen in previous cycles like, for example, 2001, fundraising will be tougher and it will take longer. The main reason is that many LPs have reached their target allocations in percentage terms simply because public equity has dropped so much, and private equity NAV hardly came down due to stale pricing. This limits some LPs from doing further investments now, which is a pity as history has shown that in environments like this and next year returns will be extraordinarily high. The US will be more affected, as European and Asian investors have strongly increased their private equity allocations but most of them are still far away from reaching their targets.

Today it is a LP and not a GP market anymore. LPs are tougher in legal negotiations and will try to change the terms. Only the best GPs will be able to raise. GPs will spend more time gauging interest before announcing a fundraising and potentially incurring a failure. Themed funds will do well such as distressed, secondaries, mezzanine and infrastructure.”

Wietlisbach recently shared his perspective as part of the upcoming Fundraising Compendium in sister magazine Private Equity International.