Report: Family office networks generate private equity investment ideas

More than two-thirds of private equity investors found their PE investment ideas through networks of family offices, according to a survey of 120 ultra-high-net-worth investors in a new report from Campden Wealth and Titanbay that focuses on PE investments.

The reason why those investors are choosing PE is straightforward: they believe the allocations will generate "potentially enhanced long-term returns."

But investors are still using PE as just one of a number of tools in a diversified portfolio. Those investing in PE had an average allocation of 20 percent, with a mostly equal division between direct investments and investments in funds. Those investors also said they had plans to increase their PE allocations and the portion that are direct investments by several percentage points each.

Fully 84 percent of PE investors allocate at least a portion of their investment to funds, and most PE investors said they plan to choose funds with less than $250 million in assets under management. That compares with about two-thirds who are engaged in direct deals.

And where private equity is popularly known for the buyouts generated by the sector, only a quarter of PE investors' funds are directed towards buyouts. They instead put about half of their funds going toward venture capital and growth equity, and another quarter going to a combination of "special situations" and "other strategies."