Is a decline in the alternative investments industry (including PE) inevitable?
Putting aside the recent performance of the industry at large (these past few years have been unusual times, after all), it seems to me like the precipitous decline in the popularity of defined benefits pension plans will necessarily mean that the asset managers that depend most heavily on them for their LP base (i.e., PE, VC, HF) will also have to shrink. Am I missing something here? What LP's are going to pick up the slack over the next, say, decade or two, as the number of defined benefits pension plans continues to shrink? It can't be easy replacing LP's with such deep pockets.
Of course, this would be a slow process, if the original premise is correct at all, but it seems inescapable.
DB is growing pretty fast outside the US. In the US specifically, there will always be HNW.
Foreign pension plans picking up the slack is an interesting thought, which I hadn't really considered before. HNW making up the shortfall in domestic DB pensions is unrealistic. Even the richest Americans can't afford to write billion dollar checks the way the largest pensions do regularly.
As an LP I can only hope the industry declines, rapidly. There is still far too much money (and dry powder) chasing too few high quality opportunities.
Agree. Too much money and too few good deals in general.
Entry valuation is getting bid up and exit valuation is getting beaten down. Many zombie investments and funds as well.
Need to see a number of low quality firms getting wiped out and legitimate players getting downsized in order to get the industry into a normal and healthy stage again.
Right now, it is clearly overheating.
Anybody care to take the other side of this? I'm not trolling here. I'm genuinely curious what the counter-arguments are. What's out there that I'm not seeing that will serve to reverse this trend?
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