Private Equity Firms Pull Back on Fundraising Hires
Fewer marketing and investor relations professionals were hired last quarter amid a “pause” in fundraising, according to Jensen Partners.
Hiring of marketing personnel has cooled down at private equity firms, echoing an industry-wide slowdown in fundraising.
After last year’s record-breaking haul of $547 billion in new investor commitments, private equity firms have this year raised $308 billion as of the end of September, according to Preqin data. It’s the lowest fundraising total for the first nine months of any year since 2015, when private equity funds brought in $245 billion over the first three quarters.
The slackening pace of fundraising has been accompanied by fewer hires of marketing and investor relations staff, according to recruiting firm Jensen Partners. During the third quarter, private equity hires fell 20 percent from the previous year — the biggest year-over-year decline for any of the alternative asset classes tracked by the firm.
“The assets that have been raised in private equity has been astronomical in the last 18 months,” said Sasha Jensen, founder and CEO of the firm formerly known as Context Jensen Partners. “The funds come to market and they close, and then there’s a pause.”
But although fundraising has slowed down compared with the past two years, it remains high by historical standards — and Jensen believes hiring for fundraising staff will pick back up next year.
“I don’t foresee this carrying on,” she added. “I see private equity bouncing back when new funds launch in January 2019.”
[II Deep Dive: Everything About Private Equity Reeks of Bubble. Party On!]
In other alternative asset classes, the third quarter was an active period for marketing hires, with 274 total moves tracked by Jensen Partners. It followed a record 400 hires during the second quarter – the busiest three-month period recorded by the recruiting firm since it began tracking hiring activity in 2013.
Year-to-date, Jensen Partners has counted 954 marketing moves, a 14.5 percent increase over the same period last year.
The fastest-growing sector within alternatives is private credit, with firms continuing to hire fundraising staff at a rapid pace. Jensen Partners recorded 37 moves during the third quarter, a nearly 90 percent increase over the same period last year. Since the beginning of 2018, the recruiting firm has recorded 110 hires within private credit.
“The limited partners I interview say the private credit bubble is not going to burst,” Jensen said. “There is no sign of a let up.”
Although there are still two months left in the fourth quarter, Jensen said hiring activity appears to be ticking up for the end of the year.
“It seems like everybody is in growth mode,” she said. “The allocations to private markets seem unstoppable.”