These findings were among the results of a poll taken by KPMG LLP, the audit, tax and advisory firm, at the Dow Jones Private Equity Analyst Conference, held last month in New York and sponsored by KPMG.
“There is a great deal of uncertainty in the market place and some participants may be waiting on the sidelines, even though we saw a number of large PE transactions announced during the third quarter” said Marc B. Moyers, National Sector Leader for KPMG Private Equity. “Fundraising has picked up in the last quarter, debt is available to finance transactions, and covenant terms are reasonable.”
Fifty-three percent of respondents reported they expected fundraising to increase over the next year, while 14 percent said they thought it would decrease and 33 percent said they expected it to stay the same.
Difficulties Finding Investment Opportunities
When asked about the most challenging issue facing private equity, 23 percent said “identifying quality investment opportunities.” The same percentage indicated that “the tough IPO market/exits” was most challenging, followed by geo-political concerns and the image of the PE industry, each at 16 percent.
“Some in the PE industry may be concerned about dealing with the new regulatory environment, such as the new reporting requirements mandated by FATCA,” said Glenn Mincey, KPMG’s National Tax Leader for PE, referring to the Foreign Account Tax Compliance Act. “Many investors are hindered by the sheer volume of regulatory compliance as well as the lack of certainty.”
Other KPMG poll findings include:
- PE executives believe energy will be the most attractive sector to invest in (27 percent), followed by healthcare (24 percent) and technology (23 percent). In last year’s survey, energy also led, but by a larger total (38 percent).
- Most respondents believed that the U.S. IPO market would generally remain the same over the next 12 months (39 percent), and 36 percent thought it would increase steadily. Only 18 percent felt that it would “take off.”
- The region offering the best investment returns, given competition, relative valuations, projected returns, outlook, and ease of doing business, was North America (41 percent), followed by Latin America (33 percent) and Asia (16 percent).
The poll was conducted at the Dow Jones Private equity Analyst Conference in New York on September 20 and 21, with a range of 41 to 147 responses per question.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International.”) KPMG International’s member firms have 145,000 people, including more than 8,000 partners, in 152 countries.