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Unseasonable temperatures

Against a backdrop of snowdrifts, the private equity industry is feeling the heat, as we explore in the March edition of Private Equity International.

In early February, our New York team battled through a foot of snow to listen to the annual earnings calls of the industry's listed giants. But while the air outside was icy cold, fundraising and deal-making activity was only getting hotter.  The earnings presentations were so full of superlatives you could be forgiven for thinking it was 2007, not 2017.

Carlyle invested a record $17.9 billion last year and is still promising to raise $100 billion between 2016 and 2019; KKR raised a record $29 billion in 2016; while Blackstone has reached $366.6 billion in assets under management and is plotting a $40 billion infrastructure fund. Apollo, meanwhile, is understood to be making progress raising its ninth flagship fund, which will be larger than its $18.5 billion predecessor.

And that's without mentioning Japanese corporate SoftBank Group, which is putting the finishing touches on its $100 billion Vision Fund. 

Private Equity International also braved the elements to head down to the second annual IPEM conference (even glorious Cannes on France's Côte D'Azur is somewhat grim in the last days of January) to take the pulse of the European private equity market. Delegates talked of intensifying competition and prices creeping upward. This chatter was swiftly followed, of course, by stern assertions that there's no excuse for sitting on one's hands or – perish the thought – doing underwhelming deals.

These sentiments were echoed by the panel of experts that gathered in London in February for our European mid-market roundtable . The participants are not letting the eventful start to the Trump presidency, impending Brexit or upcoming leadership elections across the continent distract them from their goal: getting good deals done. But abundant capital is keeping prices high, and managers need to put in the legwork if they want to impress increasingly sophisticated management teams. As TA Associates' European technology co-head Naveen Wadhera told PEI this week : “We have to meet a lot of people and touch a lot of situations to get deals done.”

Adding to GPs' list of challenges is the increasing trend within the LP community toward GP-like behaviour. This month we sat down with one such example – Canada's largest pension plan CPPIB – to find out how it walks the line of being a good partner in an LP-GP relationship and an occasional competitor for deals. The pension is positioning itself as a provider of more than just LP capital; it wants to provide GPs with a full corporate finance “toolkit”, Michael Woolhouse, its head of secondaries and co-investment, told us. An example of this would be its move to offer liquidity to funds in the form of preferred equity. “That's an area we are marketing really hard right now,” he said.

In our special focus on funds of funds this month, we examine the resurgence of separately managed accounts ; a number of different driving forces are propelling investors to seek out tailor-made approaches to the asset class.

And of course, we also published our 2016 Annual Review , including the results of the Private Equity International Awards 2016. In case you missed it, you can read about the winners here .

Click here to see the magazine contents in full . We hope you enjoy the edition.