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Private Equity Sponsors and Their 2012 Investments

Author(s): Christopher Murray

November 2012

Chris Murray discusses private equity sponsors and their 2012 investments.

Video Transcript

How have private equity sponsors realized upon their investments in 2012?

The IPO market has been very difficult in 2012.  The stock market has gone sideways and there's really not been much opportunity to exit through the public markets.  We've seen much more activity among sponsors, generally in the smaller sectors, technology, sponsor to sponsor transactions.  The larger activity has been sales to strategic players and we've seen that both to domestic strategic players and global strategic players.  Private equity is really looking for the sale at the sales mechanism as the way to get out of their investments.

What role did pension plans play in this sector in the past year?

Canadian pension plans have emerged as dominant investors in the private equity and infrastructure sectors.  Not only in Canada but globally.  Over the last two years they are probably the predominant investors in the world.  Another role they play as investors in funds themselves and they're driving the terms of those investments, whether it's the degree of carry, degree of management expense, and they are changing the terms by which other private equity sponsors raise their funds.

What do you see in this space in 2013?

The main activity sectors we've seen are in technology and resources, primarily mid-market.  Of course industrial investments continue to occur.  Canadian pension funds has emerged as a major player in the private equity over the last decade and in particular the last two or three years driving investments and also realizing on sales.  The other type of thing we have seen is the emergence of strategics finally loosening their purse strings and buying from private equity sponsors and that has been one of the major exit mechanisms for private equity in 2012.

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