“Private Equity News: Fundraising Expected to Brush Off Challenges” by Chris Cumming featuring Eric Zoller
Please click here to read the article on Private Equity News’ website: PE News
Investors fear an overabundance of capital will continue to push up deal prices, but many still plan to commit more to private equity in 2017
Private equity firms have grown used to a contradictory state of affairs over the past few years: investors are getting more and more concerned private equity deals are too rich and a correction is coming, but they keep writing bigger and bigger checks.
That dynamic can’t last forever, but it isn’t likely to end in 2017, say investors, placement agents and other industry experts. Most believe, despite some dark clouds, the coming year is likely to continue the record, or near-record, fundraising pace of the past several years, as yield-starved investors allocate ever more capital to the asset class.
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An expected roll-back of regulations placed on banks after the financial crisis could likely open the door for them to lend more, which could make life more difficult for some private equity strategies. Credit and direct-lending vehicles likely would face more competition if banks, which generally lend more cheaply, are allowed to return to pre-crisis leverage levels. However, the effects of any regulatory changes are going to take a while to sink in because Wall Street firms will wait to see how politically durable the reforms look before changing their strategies, said Eric Zoller, founder of placement agent Sixpoint Partners.
“If the banks think regulatory changes are only temporary, they’re not going to change their entire business plan,” he said.
