Debra Lussier and Paul Van Houten Discuss Fund Investment Trends in The Wall Street Journal

Recent data shows that since the first quarter of 2022, limited partners have collectively made $198.1 billion more in contributions to their private-equity managers than they have received back in distributions. In a recent Wall Street Journal Pro article, asset management partner and co-leader of the sponsor solutions group Debra Lussier said, “You’ll hear about this concept that an LP has gone negative, which means that the contributions that it’s required to make to all of its alternative assets are larger than the distributions that it’s receiving from those investments. Some large investors have gone negative for the first time. We’re seeing a slowdown in fundraising as a result.”

Some fund managers and their investors are pursuing creative exit strategies as they search for liquidity, while others are waiting for more traditional exit markets to improve.

“I think that in many respects, the last 18 to 24 months has been a reminder to all market participants that these are illiquid investments,” said Paul Van Houten, private equity partner and co-leader of the sponsor solutions group. “While there’s been a lot of discussion about these new liquidity tools, I don’t think they necessarily solve fundamental challenges, which is that these are illiquid investments and LPs are always going to face that risk.”