Service Helps Private Equity Investors Anticipate Liquidity Needs

Private Outlook, developed jointly by Northern Trust and Sand Hill Econometrics, Inc., enables institutional clients to project likely ranges of cash flow behavior in “drawdown” types of investments, including venture capital and buyout partnerships, Northern Trust said in a press release.

The report’s one-year model estimates capital calls by integrating portfolio data and historic takedown patterns with environmental factors. The five-year model projects capital call, distribution, and unrealized value scenarios based on actual historical private equity behavior.

Both models allow clients to create custom scenarios and review results to develop a more refined capital call estimate, according to the press release.

Northern Trust explained that private equity investors typically commit amounts of cash upfront, which the fund manager then draws down through capital calls over a period of years as the fund identifies investment opportunities. Distributions, or investment returns, are also made on an irregular schedule.

This unpredictability has made private equity one of the more challenging asset classes for institutional investors, particularly during the recent market downturn, according to Northern Trust.

More information is at http://www.northerntrust.com .