Limited partners are becoming increasingly concerned about full deal pricing, with 86 per cent of of private equity investors citing it as a primary concern in the months ahead, a Preqin survey finds.
Preqin polled 540 institutional investors across all private capital assets and found that investors across all alternatives are anxious about pricing. In all asset classes, a greater proportion of investors are finding it harder to source attractive investment opportunities than are finding it easier, the survey found.
The survey follows other studies that have also raised concerns about rising prices. Analysis by Partners Group published in August found that multiple expansion has led managers to increase their equity contributions, with some accepting a base case of 13 per cent to 15 per cent gross IRR in order to win sales processes.
Despite concerns around valuations, however, Preqin’s survey did reveal that investors are generally satisfied with performance and will either maintain or increase their allocations to alternatives during the next 12 months.
Private equity and private debt were the most well-perceived asset classes with 58 per cent of investors positive towards private equity and 57 per cent holding a positive perception of private debt.