Exploring LP views of the growth equity market

Drawing on our knowledge of the institutional investor community, we undertook a study to help our client get to the bottom of how investors view the growth equity segment of the private equity market.

Our requirement was to understand how LPs believe that growth equity fits into today’s private equity landscape. The insight that Arbor Square provided us with was an essential part of our strategic planning in this area.

— Operations Director

Defining an opaque sector

Ironically, while the provision of long-term equity capital to facilitate company growth is perhaps the most accurate definition of ‘private equity’, the growth equity sub-segment of the private equity market remains poorly defined. Our client needed to get a clearer picture of how fund investors categorise the space, particularly relative to venture and buyout, so that it could make better-informed decisions about how to develop its own activities in this area.

An insight into marketing messages

The research involved a series of in-depth interviews with around 30 LPs, across a range of geographies, who were known to have invested in growth equity funds. We examined where investors believe these investments sit in the greater scheme of things, both in terms of their allocation programmes and the broader private equity market. We also explored views on the key private equity houses active in this area and how these GPs describe what they do: the messages they use; their positioning; their skill sets; their use of growth equity as a competitive differentiator. What are the characteristics of the best in breed GPs?

Market opportunity

Our discussions with LPs were also structured so as to enable us to form a view of how big, or small, the global growth equity opportunity is looking forward. Where do LPs see the gaps? What frustrates them? How do they expect things to change? All insights of pivotal importance to our client.

Like to know more?

To find out more about projects like this, please contact Kevin McNally:

kevinmcnally@arborsquare.com
+44 (0) 20 7096 5017