P-E flyers don't contain enough info, investors say

Survey reveals big disconnect between what investors want — and what fund managers think they want

Oct 5, 2011 @ 1:04 pm

By Jeff Benjamin

The increasing demand by investors for greater transparency across the financial services landscape is catching the private-equity space a little flat-footed, according to the latest research from SEI and Greenwich Associates.

A global survey of more than 400 institutional investors, consultants and fund managers found that just 43% of the investors surveyed said they are receiving all the information they would like from private-equity managers.

Conversely, 85% of P-E fund managers feel their investors receive all the information they need.

“Managers who continually strive to fulfill investor expectations will lead the pack when it comes to raising and retaining assets,” said Philip Masterson, senior vice president and head of business development in Europe for SEI's investment manager services division.

“Managers' reporting efforts have come a long way in recent years, but it's clear from the survey that investors' needs are evolving and they still want more,” he added. “By satisfying investor expectations, managers will become trusted advisers and will deepen their relationships.”

In terms of gauging investor concerns, the survey revealed that 45% of fund managers identified “satisfying investors' expectations” as their firm's greatest operational challenge.

On the topic of transparency, the survey suggests that basic demands are being adequately met, but there appears to be a gap is what managers and investors see as most important regarding transparency.

While three-quarters of the surveyed managers see industry and sector reporting data as most important, the same percentage of investors and consultants said they want more information on areas such as leverage used in the fund and volatility statistics.

“Private-equity managers need to direct more focus and efforts on the client service front in order to keep up with investor needs,” said Rodger Smith, manager director at Greenwich.

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