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GP fund commitments fall year-on-year

The average commitment has fallen compared with 2016, but more firms are now investing more than 5%.

GPs are generally investing less capital in their own funds now than they were a year ago, according to data from alternative assets consultancy MJ Hudson.

Managers of funds launched in the 12 months from April 2016 committed an average 1.5-1.99 percent to their funds, down from 2-2.99 percent in the previous 12 month period, the data show.

A minority – 7 percent – committed less than 1 percent, which had not happened in previous years, while the proportion of GPs committing more than 5 percent has doubled year on year.

The number of GPs investing 3 percent remains in line with this period last year, at 7 percent.

“[The] 2017 data suggests GP commitment is becoming less prominent than other factors in investors’ GP evaluation process. If this trend away toward proportionately smaller GP commitments continued into 2018, LPs with alignment concerns may try to temper it by looking at how the GP commitment is being financed and who is participating in the GP commitment,” the report said.

The data was drawn from MJ Hudson LP Unit’s review of key economic terms across a representative sample of private equity funds that came to market in the 12 months from April 2016.