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Fundfire Alts Covers the Rise of Private Equity and Infrastructure Vehicles

Tom Stabile writes for Fundfire on the high amounts of capital brought in by firms like Blackstone and KKR through private equity and infrastructure vehicles built for their advisors. Private equity and infrastructure offerings have been growing, raising more than $10 billion across a dozen strategies that have been launched since early 2023. In addition, there are another six strategies joining the group soon giving high net worth individuals the opportunity to invest in this space.

The flow of capital from investors is constant, but due to the SEC reporting periods, the amount of cash the funds are holding can appear to be changing drastically. When a deal closes at the end of a quarter, that amount will bring the balance up while the managers are looking to invest the cash into other deals. President of XA Investments, Kim Flynn, contributed to the article and noted: “20% is acceptable, but it still is a lot of cash drag.” Managers that are unable to successfully navigate these challenges could impact the future performance or their investment decisions, she added. These strategies must deal well with price discipline as large sums of capital roll in as “it would be a real problem to overpay for assets when you face pressure to deploy,” Flynn finished.

The large funds have to figure out the right flows of cash and investment in the registered vehicles as it is not the same as private fund investing. This is a delicate balance as they need to not have too much of a cash overhang, but also need to be mindful of potential investor redemptions. High sales have been widespread, with some strategies reaching multi-billions of dollars. Infrastructure and private equity funds have surged, and will likely gain more entrants, with the funds currently in the market being a good example of the willingness of investors and the potential of the category.

To read the full article, please click here.

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