Asset Management Partners Discuss PE Fundraising Challenges Amid the COVID-19 Pandemic in Law360
Private equity fundraising remained relatively strong through the first quarter, reported Law360 in an April 24 article titled “The Difficulties Of PE Fundraising In A Post COVID-19 World.” But, even as some sponsors look to capitalize on potential investment opportunities in the aftermath of the COVID-19 outbreak, raising funds is becoming harder, and the difficulties are expected to be reflected in the figures for future quarters. The article features insights from asset management partners Sarah Davidoff, Debra Lussier and Peter Laybourn.
The pandemic has halted on-site due diligence visits, where potential investors come to a sponsor's office, which are usually an important component to convincing limited partners to invest in a fund, according to Deb, also noting that "Investors may be willing to lose a bit of that in-person context for the sake of not missing out on investment opportunities."
Locking in investors with help from video meetings is a much easier task for established sponsors, however, according to Peter, but "[f]or a brand new sponsor that you haven't sat across the table from before, there are more questions."
Fund managers and investors agree that the current situation presents investment opportunities, especially when it comes to distressed deals or investments in companies within sectors like technology and health care, highlighted Sarah, adding that "[t]hey are using this market dislocation as a time to make investment opportunistically.” She cautions that while “We will still see many successful fundraises during this period, […] it's also reasonably likely there will be challenges."