The private equity industry has done a poor job of convincing asset consultants and superannuation fund trustees of its capabilities, conceded Les Fallick, founder of placement agent Principle Advisory Services. Speaking at the AVCJ Private Equity and Venture Forum, held last month in Sydney, Fallick said most of the support the industry had won since the mid-1990s was mainly from private equity specialists within super funds. This meant private equity vendors aiming to raise funds often met strong resistance from investment committees because relationships with trustees were poor.

He urged general partners to concentrate on building relationships with consultants and trustees to “improve understanding and access” to these “two tiers of the industry”. Robert Talevski, head of global private markets at the $10 billion Telstra Super and a former consultant at JANA Investment Advisers, gave some advice to the private equity players in the audience. Talevski’s message was direct: know what consultants want and deliver it. “You’re in a very competitive situation. You’re competing against listed equity markets [and] other asset classes that are slightly more liquid, so it’s a tough thing to sell to a consultant.” Ultimately, impressive returns achieved through a proven and transparent investment process would always be an effective dooropener.

“At the end of the day, it’s about numbers. I think that’s what you need to focus on,” Talevski said. “Also, transparency: as a consultant I found it, in the early days, really difficult to understand where the true value was added.” He emphasised that it was important for managers to be able to comprehensively explain how they generated investment returns. Turning to the global fundraising environment, Sally Collier, partner at Pantheon Venturers in Hong Kong, said private equity managers were finding it challenging to garner new capital. However, investors in the US and Asian markets were more open to allocating fresh capital. “Things are freeing up. I think we’re in a position now where pension funds in general are seeing recovery… not just in private equity but in other asset classes,” Collier said.

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