The Next Alternative: Private Equity Asset Class Summary
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ALTERNATIVES State Street 2013 Alternative Fund Manager Survey Executive Summary: Private Equity September 2013
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Transcript of The Next Alternative: Private Equity Asset Class Summary
ALTERNATIVES
State Street 2013 Alternative Fund Manager Survey Executive Summary: Private Equity
September 2013
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ALTERNATIVES
State Street 2013 Alternative Fund Manager Study
• In July 2013, State Street conducted a survey of 391 leading alternative asset managers in
collaboration with Preqin, a leading source of data and intelligence for the alternative fund industry. Of
these, 100 were from the private equity sector.
• Managers provided their insights on current challenges, priorities and opportunities across the
industry, as well as their predictions for the future.
About the Research
42%
32%
13%
13%
Private Equity Respondents by Region
North America
Europe
Asia Pacific
Other
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ALTERNATIVES
Drivers of Change
Private equity managers view investors’ demands for transparency as the top driver of change,
followed by more intense industry competition.
Source: State Street 2013 Alternative Fund Manager Survey
49%
39%
32%
30%
30%
0% 10% 20% 30% 40% 50% 60%
Investor demand for greater transparency around risk andperformance
Increased manager competition for limited pool of assets
Increased regulatory scrutiny of alternative funds
Investor demand for more favorable fees
Investor demand for greater liquidity at fund level
Top Five Drivers of Change in the Private Equity Sector
Note: Respondents could select up to three answers. Only the top five responses are shown.
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ALTERNATIVES
Transparency in Focus
Private equity managers are taking a range of actions to address the heightened need for transparency.
Source: State Street 2013 Alternative Fund Manager Survey
59%
35%
26%
19%
0% 10% 20% 30% 40% 50% 60% 70%
Improving alignment with evolving industry standardssuch as ILPA, BVCA, EVCA
Enhancing investor services functionsto respond better to investor inquiries
Deliver information to investors via internal Enhanced PortalTechnology, beyond the normal Investor Statements
Implementing a new Private Equity Investor Portal
Top Areas of Focus Cited by Private Equity Managers to Address Heightened Transparency Requirements
Note: Respondents could select up to three answers. Only the top five responses are shown. *Institutional Limited Partners Association, British Private Equity & Venture
Capital Association, European Private Equity & Venture Capital Association
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ALTERNATIVES
Evolving Strategies Create Competitive Edge
More than one-quarter of private equity managers are preparing to expand
the range of investment strategies they offer to investors.
15%
13%
12%
8%
8%
17%
16%
26%
16%
9%
Change fee structure
Expand into new regions
Add new investment strategies with in-house resources
Enter joint ventures with investors
Offer funds with shorter lifespans
Product and Investment Changes Made by Private Equity Managers Since 2008 or Planned by 2018
Introduced this change since 2008 Plan to introduce this change over next five years
Source: State Street 2013 Alternative Fund Manager Survey
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ALTERNATIVES
Operational Excellence With a Spotlight on Risk
Private equity investors are hungry for more information from their managers, more frequently.
40%
40%
15%
15%
11%
6%
25%
3%
6%
19%
Report more frequently to investors on our investment holdings
Report more information to investors on holdings, risk andperformance
Reduce amount of leveragewe employ
Use an independent administrator
Purchase or license software to upgrade investment ops technology
Risk and Operational Changes Made by Private Equity Managers Since 2008 or Planned by 2018
Introduced this change since 2008 Plan to introduce this change over next five years
Source: State Street 2013 Alternative Fund Manager Survey
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ALTERNATIVES
Challenges for the Future
Private equity managers cite fundraising and generating performance as their top concerns for the future.
Source: State Street 2013 Alternative Fund Manager Survey
83%
65%
27%
20%
20%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Fundraising
Generating performance
Adapting to regulation
Fulfilling investor demands
Finding skilled staff
Top Five Challenges Predicted by Private Equity Managers Over Next Five Years
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