Private Markets Due Diligence

Private Markets Due Diligence: By The Numbers [INFOGRAPHIC]

This year marked eVestment’s third annual Private Markets Due Diligence Survey and the largest to date, including investor, consultant and fund manager respondents representing private market assets under management or advisory of more than $850 billion.

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Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?

Respondents were surveyed on a range of key industry topics, including perspectives towards the use of credit facilities, benchmarking approaches and more. Explore some of the survey highlights in the infographic below.

Predicting Future Success

Top Three Factors Perceived as Extremely Important in Due Diligence

Investors, consultants and fund managers agree that “team” is the most important factor when it comes to manager selection, but there is a disconnect when it comes to the importance of “strategy.” Investors and consultants regard strategy as the next most important factor in due diligence at 67% whereas only 54% of fund managers agreed. Instead, fund managers believed market opportunity held greater importance.

Private Markets Due Diligence

Credit Facility Sentiment

With such proliferation of use, and coverage in the media, what do investors and consultants really think about managers using credit facilities to manage drawdowns? Surprisingly, 53% of investors and consultants hold a neutral view to the use of credit facilities. Only 23% of investors and consultants viewed the use of credit facilities as negative, and 23% as positive. Many respondents that held a neutral view stated they would want to assess the use on a case-by-case basis and reserve judgment until the finer details were better understood.

Private Markets Due Diligence

Trust But Verify

Private Markets Due DiligenceThis year, 36% of investors and consultants responded that they never or rarely trust the performance data provided by the fund manager. Some of the reasons respondents gave for this view included a distrust of unrealized valuations during fundraising and the experience of finding errors, albeit not often material. This probably explains why when surveyed on their frequency of recalculating fund managers’ track records, 75% of investors and consultants stated that they recalculate performance numbers more often than not.

Private Markets Due Diligence

Identifying Alpha

Private Markets Due DiligenceNearly two-thirds of investors and consultants use Public Market Equivalent Analysis, with more than 50% increasing their use of the analysis practice. Many respondents said that they will vary the use of index based on the geography and/or sector of the fund they were looking at, confirming that PME analysis is being used as a due diligence tool.

About eVestment Private Markets

eVestment Private Markets is a market intelligence and performance analytics solution delivered by eVestment, a Nasdaq company. eVestment Private Markets serves both LPs and GPs within due diligence and investor relations. Our sole focus is providing our clients with the information they need to make more informed decisions.

Article by eVestment


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