PE HUB Wire Highlights, 10.4.19

Distributions slow even as exit activity remains strong: what gives?

Happy Friday, Hubskis!

It’s been a jam-packed week full of interesting goings-on around the industry. Both fundraising and M&A seem to be fully engaged.

Here’s a few things to consider as we move into Friday:

Money back: An LP told me their PE portfolio over the past few months has shifted relative to the past few years. More recently, distributions have dried up, which is startling considering the portfolio has been spitting cash.

This is not necessarily surprising: distributions have outpaced GP capital calls for years, so much so that it almost feels like the natural state of things. But since last year, more institutions have reported an inversion of that seemingly natural order. Distributions have slowed while calls have kept pace.

“It feels like things are getting softer out there … we’re seeing that within our own program on distribution rate, which is well off its pace. I’ve talked to other LPs and they’ve seen similar things,” the LP told me.

The LP said, even accounting for a higher commitment pace which would cause some cash flow drag, that on an absolute basis, “cash flow has fallen off materially.”

Another LP source agreed that distrubitions have slowed, at least in buyouts, though venture capital funds are still distributing capital, especially those with exposure to tech unicorns.