Coller Barometer: confidence in PE is at pre-crisis levels

The Barometer also showcased LPs' expectations, which some believe could be unjustifiably high. More than half (60%) of LPs are planning to increase their volume - even if modestly - to the asset class, with expectations of achieving returns of 16% or more. This is the same level seen in 2005-2006, just two years before the onset of the financial crisis.

Confidence and skill levels among LPs appear to be growing, while the reliance on intermediary institutions like fund-of-funds is diminishing. CIO Jeremy Coller commented, "There will certainly continue to be investor demand for funds-of-funds in the private equity industry, but firms that cannot demonstrate a good track record and strong value-add will increasingly fall by the wayside." He further added that investors' own skills are "enabling more LPs to commit directly to GPs they like."

While this is largely the case for private LPs, half of those working for corporate and public pension funds believe their groups are not maximizing returns from the private equity asset class. Hiring additional investment professionals was named most often as a way to fix this problem.

Other fragmentations among LPs came in the form of the stated importance of environmental, social and governance investment criteria. While two-thirds of LPs based in Europe say that ESG factors are important, just one-fifth of North American LPs and one-quarter of Asia-Pacific-based LPs agree.

 

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• Topics
• LPs
• Coller Capital
• Jeremy Coller