With investor discontent on the hefty fees charged by equity firms and the lack of control over the purchases by brokers, many big investors are going direct to the deal.
Many large scale investors, such as pension funds and insurers are directly teaming with private equity firms rather than allowing the firm's to lock the funds of these investors. This new development is becoming a challenge to the current US$3 trillion industry, where private equity firms such as KKR and Apax have now modified their strategies in raising money from investors and then charge management and performance fees.
For the first time, buyout firms are raising less amounts of funds from known investors and it is forecasted that this trend would continue. Another similar development is the increase of co-investments by 36% in the first quarter of 2013, a three percent rise from the previous year. This is a clear indication that rising interest in investors to put their money beyond traditional funding vehicles.
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