A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

INDUSTRY OVERVIEW

Figure 10: Private equity real estate funds on the road overtime worldwide (2005-2009)

450 400 350 300 250 200 150 100 50

450 400 350 300 250 200 150 100 50 0

384

273

1.2

228

127

Number of funds

Aggregate target in $bn

76

33

29 16

18

4

0

JAN-05

JAN-06

JAN-07

JAN-08

JAN-09

Number of funds Aggregate Target

Source: Preqin Ltd, 2009

In the current economic context, investors in private equity real estate are being very care- ful and the vast majority is making few commitments. It is perhaps natural that, given their cautious outlook, many investors will look towards more established markets, which they are more familiar with, rather than invest in emerging economies, which are perceived as being higher risk. Many investors also feel that the best opportunities are to be found in the established real estate markets of North America and Western Europe 14 .

1.2.6

Clean technologies

Private equity clean tech involves a private equity firm raising funds from investors to create a private equity fund, which then invests capital in the clean technologies industry, which includes natural resources, energy and other environmental focused products. For investors aiming at making responsible investments, the clean tech sector offers the opportunity to address sustainability issues whilst simultaneously creating long-term value. In addition, investors are interested in the potential financial gains and the diversification benefits brought about by clean tech investments, as many feel that the market has the potential for a high level of growth, and fluctuations in the clean tech market do not neces- sarily correlate with those of the private equity market as a whole 15 . The growth of this sector ties in with the increasing consumer and investor awareness of climate change and environmental issues, growing levels of regulations and incentives provided by national governments and the ever-increasing global demand for energy and improvements in technologies within the clean tech sector. These factors have assisted in improving the potential profitability of the market, with increasing numbers of private equity and venture capital fund managers seeing suitable opportunities opening up for investment, and a high proportion of investors in private equity now seeking to gain exposure.

14 Source: Preqin Ltd, “Real estate Spotlight”, June 2009 15 Source: Preqin Ltd, “The 2009 Preqin Private Equity Cleantech Review”, May 2009

A thorough understanding of PE | page 25