Global private equity watch 2013

Challenges and opportunities

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Competition in the PE industry is intensifying. Asset managers are moving into the PE space, and PE managers in emerging markets are building capacity and starting to expand geographically.

At the same time, regulatory pressure has mounted as PE has come under the umbrella of alternative investment rules, making the business of raising capital and investing in private companies ever more complex.

Despite this especially difficult environment, PE has done well.

Outperforming in a tough landscape

PE funds have outperformed many other asset classes over three- and five-year horizons, including most equity indices and alternative assets. The Venture Economics all-PE index, for instance, has returned 4.9% over the last five years, significantly higher than US and global equities.

In addition, global PE fund-raising was up 10% in 2012 to the highest level seen since 2009, driven largely by the success of global funds in attracting commitments. PE was also able to capitalize on the strong credit markets seen in 2012. Low interest rates enabled firms to refinance existing portfolio companies, chipping away at the refinancing wall and pushing back maturities.

Investments and exits closed the year down from 2011 figures, although the overall figures mask regional variations. New deals were up in the Americas, down slightly in Asia-Pacific and down significantly in the EMEA region.

Why distinctive PE firms will flourish

This year's global private equity watch examines these market trends and takes a closer look at recent exit activity.

We also look at contrasting strategies firms are taking to stand out and thrive in a highly competitive landscape - diversifying by platform or geography, or adopting a laser-like focus to excel in core markets.