Impact of Economic Uncertainty on PE Fundraising and Fund Formation Efforts (Part Two of Two)

Aside from pursuing outsized returns, institutional investors have steadily increased their allocations to the alternative investment industry because of its ability to generate returns during an economic downturn. The current environment is no different, and investors remain interested in committing to new PE fund launches. The rules of the game have changed, however, as the fundraising process has been upended by a lack of in-person meetings; an increased dependence on existing relationships; and difficult questions from investors about sponsors’ plans going forward. Those and other ramifications of the coronavirus pandemic on the PE industry were addressed in a recent program featuring Proskauer partner Monica Arora and Monument Group partner John McCormick. This second article in a two-part series details the new PE fundraising landscape, what sponsors can anticipate and ways they can adjust their practices accordingly. The first article prescribed several approaches to portfolio valuations, liquidity and LP communications that PE sponsors should adopt to successfully navigate the current environment. For further commentary from Monument Group, see our two-part series: “Roundtable Explores PE Trends Related to Emerging Managers and Real Estate Investing” (May 21, 2019); and “Roundtable Discusses Rapid PE Growth in Asia, Along With Recent ODD and Secondary Market Trends” (May 28, 2019).

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