Q2 Capital Call Uptick, but Distributions are Holding Steady
My guess is that there were some leading indicators of activity that were read by bullish managers, however, my guess may even be that firms were looking to secure funding to ensure it was available. Limited Partner (LP) contracts are extremely airtight, but you can’t get money from a bankrupt or distressed entity, so this looks like a bit of self-preservation by private equity. Alternatively, it could be an act of staying ahead of bad news as fund distributions over the same time period were holding steady meaning that LPs were working at a net negative in some cases. The good news in all of this is that the Cambridge Private Equity Index did appreciate by 4.3% in Q2 being lead by Retail, Financial Services and Energy which were previously hard hit segments. The issue here is being that the Dow surged approximately 8.5% during the same time period which would possibly lead to some interesting General Partner/Limited Partner conversations. I will try to reach back out to the network for an interview with a fund raising expert to provide their point of view in an upcoming blog entry.
