Are PE's best days behind it? An LP and GP discuss

Have expectations for private equity changed? What’s the role of the asset class in the portfolio these days?

These are the questions that Dale Burgess, executive managing director for equities at Ontario Teachers' Pension Plan, and David Nowak, president of private equity firm Brookfield, tackle in the second episode of PEI Group's new Commitment Issues podcast miniseries.

As the industry works through a backlog of unrealised assets, questions have arisen about performance, asset valuations and firms’ ability to acquire and sell companies in the time frame LPs have come to expect. For instance, average investment hold periods in private equity have now risen to around seven years, according to data from Bain & Company. Performance has to be even greater to achieve the same types of returns that private equity generated in past eras of cheaper debt.

As Burgess and Nowak explore, this can present a significant challenge for some firms, while for others – particularly where operational improvement is an established part of the toolkit – the game hasn’t really changed.