Data from Preqin shed some light on private equity activity in 2014, and showed that more public pension funds invested in private equity in 2014.
Even still, public pensions’ average allocation to private equity has dipped slightly since 2013.
Preqin, the investment alternatives data provider, found that the number of active U.S.-based public pension funds in private equity has risen year over year, from 266 in 2010 to 299 in October 2014. The average allocation to private equity was 7% as of October 2014, down from 7.2% a year earlier.
Preqin said private equity looked set to remain an important component of U.S.-based public pension funds’ portfolios for years to come, offering investors good portfolio diversification and outsized returns over the long term.
Fundraising for the year was likely to be strong, Preqin reported, with $254 billion raised by funds that closed in the first half.
A record 2,205 funds are currently in the market seeking an aggregate $774 billion, compared with 2,098 funds that were looking to raise $733 billion in January.
Preqin also reported that its internal data showed co-investment would increase in 2014. It acknowledged that concerns about high expenses and competition were holding back some general partners from offering co-investment opportunities. But researchers found that co-investment figured prominently in the plans of many GPs and limited partners.
Preqin said that as the private equity industry matures and investors become more sophisticated, co-investment activity could increase, with benefits for both fund managers and limited partners.
Preqin also found that venture capital funds raised more money in 2014 than in 2013.
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