by Andrés Ramos, Content Marketing Specialist – Nasdaq Private Fund Solutions
Real-time data on how pension plans are committing capital for private fund managers offers valuable insight into how the market is trending, what strategies are popular with investors, and which of their competitors are finding fundraising success.
According to the Private Markets Monthly Monitor, through the first five months of 2021, pension plans have reportedly committed a monthly average of $12.9 billion to private markets funds across private equity, private debt, real estate, and real assets. On an individual commitment basis, plans allocated $79.8 million per commitment to private equity funds versus a $102.7 million average bitesize for private debt funds. Real estate and real assets funds have seen very similar average commitments sizes through 2021 of $67.8 million and $67.5 million respectively.
Total Reported Pension Plan Commitments by Asset Class
2021 YTD as of 5/31/2021, Source: eVestment Market Lens
While keeping tabs on recent commitment activity is valuable intel for GPs, forward-looking insights give fund managers actionable data points. Knowing the LPs with clear intentions to commit to their strategies can serve as the foundation for planning and executing a successful fundraise.
Latest private markets allocation data offers foresight into future activity
Understanding institutional investors’ current vs. target asset allocations is a key starting point in the process of identifying market opportunity and investor fit for a new private fund capital raise. When an investor is significantly below their target allocation for an asset class, or revises their target allocation higher, it is a clear signal of intent and fund managers can expect to see robust future commitment activity from that investor.
The eVestment Market Lens platform collects and documents information from 475+ public pension plans, including all current and target asset allocation data. By focusing on those under-allocated against their private markets targets, GPs can identify investors that might be good candidate to target in future capital raising efforts and ensure time is spent pursuing the most viable commitment opportunities.
As of July 12, 2021, there were 124 LPs reporting under allocations to private equity with an average of $274.75 million of capacity for new commitments. The table below showcases a sampling of these investors and their allocation figures.
|Pension Plan||Current PE Allocation||Target PE Allocation||Capacity ($mm)|
|Fort Worth City ERF||11.81%||15.00%||$72.0|
|Rhode Island ERS||8.80%||11.25%||$207.5|
|San Antonio Fire and Police||6.50%||7.00%||$16.8|
|St. Louis Public School RS||7.30%||10.00%||$23.9|
Which LPs will be making commitments to your strategy?
In addition to tracking past commitments and providing unique LP insights, the eVestment Market Lens platform tracks investors’ asset allocation weightings. With new screening functionality, in a few clicks you can see exactly which LPs are underweight against various asset classes, including private markets, and by how much.
Going Beyond Market Data to Drive Fundraising Success
With a robust foundation of investors with open allocations to your strategy, GPs need to then go a layer deeper and understand “how” and “why” each investor will allocate capital.
Unlike legacy market databases, eVestment Market Lens goes beyond opaque data points on past activity and surfaces actual investor documents created and submitted to investors. This gives verifiable and granular information into the actual commitment pacing plans, consultant advice, past investment memos of investors and much more.
With deeper knowledge of potential future commitment activity, fund managers gain proactive and actionable insights that can drive success in an increasingly competitive capital raise process.