Last week the UK Government announced the Mansion House Compact, a voluntary pledge by some of the country's largest defined contribution schemes to commit a minimum of 5% of total assets to unlisted equities by 2030.
The announcement also included proposals for major changes for local government pension schemes (LGPS), by increasing minimum pool sizes to £50bn and doubling allocations to private equity to 10%.
While this is being hailed as a boon for the private equity sector, commentators are stressing the need for caution and careful consideration of the additional risks associated with private equity investments. Namely around the lack of transparency, possible investment performance risk, manager risks, valuation risks and regulatory and legal risks.
Rigorous due diligence before and during the investment period will be essential and the increased allocations will surely attract additional scrutiny on both sides of the investment, for LGPS allocators, and for private equity managers.
Dasseti offers digital due diligence platforms for both LPs and GPs to help manage the risks associated with private equity investments, and to automate and streamline the response process to reduce the additional burden on team members.
Last year we wrote about the risks associated with pension funds investing in private markets.
We also covered some of the questions LPs should ask private equity firms when performing operational due diligence on PE funds.
Our team of experts are on hand to answer any questions from either LGPS teams, or GP teams that may be struggling to cope with the current and predicted levels of data requests. Get in touch today.