Private markets fundraising insights for 2020 and beyond
3 takeaways from our chat with Nasdaq #TradeTalks
Earlier this month Graeme Faulds, Director of Product at eVestment Private Markets sat down with Nasdaq’s Jill Malandrino to discuss how the COVID-19 pandemic has affected private equity fundraising in 2020. Here are three key takeaways from the segment.
Public plan investors are unfazed
Despite uncertainty in global markets caused by the pandemic, investors have continued to commit to new funds. According to eVestment’s Market Lens, through the first half of 2020 public plan reported commitments to private equity totaled $34.4 billion compared to $33.5 billion in the first half of 2019. This represents a 3% increase in reported commitments.
Denominator Effect put a pause, but not a stop, on new commits
The denominator effect slowed commitment activity in the private markets shortly after the initial economic impacts of the pandemic, but has since subsided. The phenomenon limits an institutional investors ability to make new commitments due to portfolio allocation imbalances. Investors may in fact be pushing more aggressively into new commitments to take advantage of opportunities created by the market dislocation.
Where are investors looking for opportunities? Private Debt
The economic shutdowns and knock on effects of the pandemic have created significant financial stress on businesses across industries. Special situations and opportunistic funds are well positioned to offer liquidity and financing to these distressed companies and investors are committing to these strategies to start putting capital to work.