Commitments to new GPs’ debut PE funds are strong, with 91 per cent of LPs saying debut funds have equalled or outperformed the rest of their private equity portfolios.
Three quarter of North American LPs, and 45 per cent of European LPs, have committed to debut funds from new GPs since the financial crisis according to Coller Capital’s Global Private Equity Barometer. The report also found that private equity has continued to deliver strong returns for LPs, with four fifths of all private equity portfolios having delivered annual net returns of over 11 per cent across their lifetimes. Eighty per cent of private equity investors have been approached with fund restructuring proposals since the onset of the financial crisis.
One fifth of LP have also received more than five fund restructuring proposal and approximately the same proportion of LPs have actually participated in fund restructurings since the financial crisis. Nearly 40 per cent of LPs also plan to sell, and 50 per cent to buy, assets in the secondaries market within two years. Coller CIO Jeremy Coller said, “Creative destruction is the name of the game in private equity today.
“Investors are accelerating the natural pace of change in private equity through hyperactive buying and selling in the secondaries market, a demonstrable willingness to support newly-formed GP franchises, and decisions to exit or stay invested in restructured funds.”
‘Early bird’ discounts have also remained a common feature of the fundraising market, with over four fifths of LPs having been offered ‘early birds’ in the last two years and two thirds of LPs have taken advantage of them. Over 50 per cent of LPs in North America and the Asia-Pacific say that current fee levels are acceptable as long as fees are transparent and fund performance is strong, but only 30 per cent of European LPs agree.
LP appetite for private debt also remains high, with 53 per cent of LPs either having recently committed to private debt funds or expecting to do so soon.
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