Survey Indicates PE Investors’ Liquidity Needs Are Still Unmet

According to an SEI survey a considerable share of private equity investors believe the asset class has become more liquid, yet few believe the advances are sufficient to meet current needs.

The survey, entitled ‘Solving the Private Equity Liquidity Challenge: a Work in Progress’, was completed by 212 individuals, of which 47% of general partners (GPs), 36% of limited partners (LPs) and 33% of consultants agreed that the Private Equity market is “more liquid than it used to be and will continue to become more so.”

However, only 22% of GPs, 19% of LPs, and 17% consultants said the industry’s liquidity needs are currently being met. 32% of respondents also stated that they expect the development of Private Equity Mutual Funds and Exchange-Traded Funds to gain importance in relation to private equity.

“Traditionally, a lack of liquidity has been assumed by private equity investors, but those expectations are evolving,” says Philip Masterson, senior vice president of SEI’s investment manager services division, and head of its international business. “Escalating institutional demands and broadening market participation are driving the rapid evolution of private equity trading venues.”

“Increasing liquidity is good news for private equity managers, but they will need to adapt their operating infrastructure to changing market structures,” advises Masterson.