Slower distributions, longer holding periods and a more competitive fundraising environment are changing the questions LPs ask of private equity managers. At SuperReturn Europe, investors explored what they now expect from GPs, how they are assessing performance in a tougher market and what it takes for both established and emerging managers to stand out.

For Skandia Investment Director Sofie Kulp-Tåg, one principle is particularly important: headline returns are no longer enough. LPs need to understand how the manager created that value, and whether it can do it again.

“In a growing market, it’s easy to look smart”

Many LPs are still managing commitments made during a very different market environment.

Holding periods are longer, distributions have been slower and some investors remain over-allocated. Kulp-Tåg does not expect the exit market simply to snap back.

Against that backdrop, manager selection becomes more demanding.

Today, LPs need to look more closely at what the manager itself contributed.

How was the value actually created? Does the GP have a repeatable operating model? And can that approach continue to work without relying on the same financial tailwinds?

What are LPs looking for now?

Those questions extend well beyond one investor.

A SuperReturn Europe main-stage discussion brought together LP perspectives from the Pension Protection Fund, Lotus Family Office, a single family office and LHV Asset Management to examine how investors are approaching Europe, assessing risk and return, and adapting their allocation strategies.

What does it take to back an emerging manager?

For emerging managers, the challenge can be even sharper.

Without a long institutional track record, newer GPs need to demonstrate why an LP should take the additional risk of backing them.

A second SuperReturn Europe session explored how emerging managers can differentiate themselves, build credibility and overcome some of the barriers to fundraising in Europe.