Private Equity Fund Managers
The private equity fundraising process typically has two phases. The first is the premarketing phase during which fund managers are in soft sell mode, updating and exchanging information with preexisting and potential investors. The second is the allocation phase during which fund managers ramp up their efforts to ensure that capital is invested in their funds by certain target dates.
Private equity managers face their biggest challenge when trying to source new investors. Currently, there are two ways to meet this challenge. The first is to purchase an alternative investor contact database, which is essentially a list of investor contacts that managers can search and sort. Typically, these contact databases are moderately current and require extensive in-house resources to execute e-mail or phone canvassing campaigns, which is inefficient and time-consuming.
The second option is to use placement agents to source new investors. This option is very expensive and can be a nonstarter for many midlevel fund managers. Those managers that can afford the service report various levels of success. In addition, there is an industry-wide debate regarding the efficacy of the placement agent and the associated business model. The result has been that many firms have created in-house marketing teams to replace the placement agent model.
Typically, private equity funds have certain investor profiles or categories of investors that are fits for their funds. Finding other similar investors as well as new candidates is a top priority for fund marketers.
One part of the BHA platform is a private equity investor mandate database. The investor mandate database is different from traditional alternative investor contact databases. BHA has a team of research analysts that speaks to the most well known alternative investors in the industry to discover their current mandates.
When a BHA analyst interviews an investor, the mandate information is sent back to the investor to verify. Only after the investor approves the mandate profile is it made available in the BHA mandate database. The BHA analysts speak with investors every 90 days to ensure that all private equity investment mandates are current and accurate.
BHA’s private equity investor mandate database helps marketers by giving them the ability to source investors by region, sector, and category of investor. Private equity managers can search by these key investment parameters to gain exposure to an entirely new investor market. For example, a private equity marketer may have an established U.S. investor base and want to broaden its focus to Europe. Another benefit of the investor mandate database is that private equity managers can use it to update their current in-house investor records while sourcing new investor relationships.
Managers can quickly identify new investors on the BHA platform through detailed investor profiles. Investor profiles provide a descriptive summary of investors’ current private equity interests within several key areas. These areas are highlighted in each investor profile and cover the following investment information:
- Strategy of the fund
- Sector interest
- Region or geographic interest
- Fund capacity
- Manager pedigree or track record preference
- Desired returns or performance expectations
- Allocations sizes
In summary, BHA helps marketers in three ways. First, BHA’s matching technology facilitates sourcing alternative investors. BHA analysts are alerted during an interview that this investor is currently seeking a firm and product strategy that matches a client’s offering. Second, BHA’s filtering technology allows a fund manager to source investor candidates that are a good fit for the fund. Lastly, every BHA client is assigned a dedicated research analyst who acts as the firm’s outsourced marketing support staff. The BHA research analyst finds qualified investor leads for clients by canvassing the database and targeting investors. In addition, the research analyst focuses on special client projects, such as sourcing investors for upcoming marketing trips or vetting internal databases to update investor contact information.
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Distressed and Special Situations Funds Attract Investors
By David Wilkinson - By some estimates, almost $1 trillion of high-yield debt and leveraged loans will mature and need refinancing between 2012 and 2015. Distressed and special situations funds will be able to help fill this need by injecting necessary funding into capital hungry firms. In a report on its outlook for the 2010 private equity market, a ... Read More
Fund Managers
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BHA Marketing Position
BHA Quarterly Research Report
Q4 2009
