Regulation is still the chief concern of institutional investors trying to operate an effective private equity program, according to Preqin, a research firm for the alternative assets industry.
In a December survey of more than 100 institutional investors across the globe, 26% of private equity investors cited regulations as their main challenge. This compared with 31% who expressed the same concern in a Preqin survey last July.
Twenty-two percent each of respondents in the new survey said performance and the economic environment were also concerns.
Preqin noted that the Alternative Investment Fund Managers Directive, which comes into full effect in July, and Solvency II and Basel III farther into the future, will predominantly affect North American and European investors.
These are examples of changing laws around the world that will affect private equity players, Preqin said.
In the U.S., implementation of the Volcker Rule will limit the amount of capital American banks can hold in private equity or hedge funds to no more than 3%.
Preqin said that despite the concerns expressed by private equity investors, the actual effect of recent regulation has been felt by a much smaller number of investors.
The directives, it said, were applicable to only certain types of institutional investors operating in certain geographies. Basel III targets banks, and Solvency II affects EU insurance companies.
