Poor returns from credit bubble vintages and smaller commitments to few managers are expected to drive this attrition, the firm states in its Triago Quarterly publication.
Any long-term shakeout doesn’t mean the number of GPs will drop. Buyout firms are also experiencing an exodus of junior partners who are leaving. This “lost generation” — which refers to buyout execs that have expertise in specific sectors but are stuck at generalist teams at bigger buyout shops — are jumping ship to found their own funds and firms. These execs may eventually be known as “the new generation,” according to the global placement agent.
The Triago Quarterly also gives us the traditional industry items that we expect. Triago estimates that net asset values across all categories of PE funds fell 3% to 5% on average in the three months through September. By comparison, PE portfolio companies produced double-digit losses over the same time period. Triago says the small estimated markdown for Q3 NAV, plus the expected drop in purchase price multiples could help leveraged buyout volumes in Q4 and possibly the first half of 2012.
Calls and distributions during the first half of 2011 were running even, at 6% of total capital commitments for Triago funds. Triago estimates that cash distributions to LPs will hit 7.5% for the year, while cash calls will amount to 10% of committed capital.
This year’s fundraising will likely match last year’s total of $200 billion, Triago says. The $200 billion collected in 2010 marked a six-year low in fundraising, Triago said.
See the Triago report here.