The growing importance of investor relations

There are multiple reasons for this. Among them is that LPs have become more sophisticated and require more information than in the past, when private equity received just a small piece of what was a small allocation to alternative assets. The broader investor bases of most established firms have made it very taxing on the limited time of investment professionals to communicate and interact with LPs. In addition, sources of capital are now more diverse, making it even harder for GPs to make meaningful contact with every interested party on a regular basis.

Of course, there are also issues that have arisen in the fallout from the global financial crisis, such as LPs being unable to meet draw-downs, secondary sales and the perennial discussion on management fees and carried interest. Investor relations professionals are well positioned to deal with these situations.

Some firms have for years designated someone in Asia to regularly court and interacting with existing and potential LPs. The Carlyle Group was one of the earliest to focus on this aspect with the addition of David Tung as a managing director in 2000. Tung honed his skills as managing director of the Asian business at Merrill Lynch's private placement group, which was among the most prolific fundraising machines of the 1990s private equity scene.

More recently, there have been other notable investor relations additions at global firms' Asian practices, including Hemal Mirani at CVC Capital Partners, Clifford Chiu at KKR, and, to an extent, Michael Chae at The Blackstone Group. Asian firms have also beefed up communications with their LPs through the help of professionals like Lisa Herrell of The Longreach Group, Evan Gallagher of IDFC and Paul Shaw of Pacific Equity Partners.

It is very likely that investor relations will continue to increase in importance as the top private equity partnerships brave the current markets to raise new vehicles (most of them substantially larger than their predecessor funds).

Finally, AVCJ will not be publishing next week due to the festive season, so let me take this opportunity to wish you all a merry Christmas and a happy and prosperous New Year.

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• Topics
• Regulation
• LPs
• Investor relations
• regulation