What’s Trending In Private Equity: Oversubscribed Funds
Robert L. Greene, President and CEO of the National Association of Investment Companies (NAIC), shared an interesting article on oversubscribed funds. “Oversubscribed” is a term used when more capital is raised by a fund than was initially sought and is a sign of the marketplace’s confidence in the fund’s management team. Recently, several NAIC member firms achieved oversubscribed status when they set out to raise capital for their private equity funds. This was the first time in the NAIC’s history where so many diverse firms accomplished this feat within a relatively short period of time.
In “Outsized Performance is met with Outsized Demand,” we speak with diverse fund managers and others within the industry to gain an understanding of the dynamics occurring that are leading to the private equity marketplace recognizing the talent in the diverse space. What we found is these diverse management teams cut their teeth at large institutions and in many cases set up shop as a team after building a history of performance together. And that history of performance (delivering returns) is helping them attract capital to these funds.
But this isn’t a diversity play. Institutions placing retirement funds with these diverse managers are doing it for one reason – they’re delivering outstanding returns. Institutional investors are realizing that these talented managers can compete with – and often surpass – the big name private equity firms when it comes to their fund performance.