London update - July 2020

22 July 2020

The latest update from London Representative Christine Gill

The sentiment of the London funds sector has been one of caution. Recent conversations with placement agents, investment management firms and service providers have all echoed the same message that deal flow is extremely low in the current environment.

Recent conversations with private equity fund houses suggest a 'sit-on-the-sidelines' approach, waiting to see what the valuation profile will look like in Q3 2020. Pitchbook commented on how European private equity deal volume dipped in Q2 2020 to its lowest quarterly figure since Q3 2013 driven by the uncertainty caused by Covid-19.

A leading placement agent firm shared insight into the current challenges for GPs launching funds. It will be tough for a lot of GPs however - some are going to need to focus on their existing investors and close prospects. Others might delay until they can see a way to do in person meetings. Some might reduce their fund sizes as a result. All GPs need to spend time with their investors and prospects and connect early before in person meetings start again.

GPs raising ‘dislocation’ funds is a current trend and there might be more opportunities in turnarounds and distressed areas. We may see some shift in strategies that LPs focus on in the short term, but overall private equity as an asset class remains very attractive.

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