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Six LPs, Seven Questions –

With the first quarter now complete, we thought it was an ideal time to get a status report from the limited partner community. So, we interviewed six of the market’s most established investors and asked them a series of questions. To ensure candor, we agreed to keep their responses anonymous. Buyouts plans to do this on a quarterly basis.


LP #1 Corporate

LP #2 State Pension Fund

LP #3 Advisor

LP #4 Private Corporation

LP #5 Collegiate Institution

LP #6 Private Equity Investment Firm

With valuations so low, do you expect to increase your allocation to private equity?

LP#1 No. Our view is that when we go into private equity funds we anticipate capital will be drawn down over 2-4 years, so even with lower valuations, we have not adjusted amounts going into private equity. We look for smart firms, and our allocations have not changed because of lower valuations. We don’t try to time the market.

LP#2 Yes. We have just increased our allocation 4% to 5% for 2003 for the broad asset class, long term target…Why? We recognized the asset class is desirable, and we tend to be on the low side, historically low relative [to pension funds of like size].

LP#3 No. For the bulk of our clients, allocation is set as a percentage of total portfolio market value.

LP#4 No. The fund won’t change its allocation, but we are always on the lookout for opportunities that we think will do better than the public markets.

LP#5 No. I’m not sure we would argue that values are as low as they are going to get. We believe the industry is tied to public markets, and that the public markets will be depressed for the next 5-7 years.

LP#6 No. We have a steady program size. We do not try to time the market. There may be segments we address according to availability, but overall, our strategy is not affected.

Buyout subscribers can read more on this transcript in the protected