Dutch investors favour PE

A study of 100 major institutional investors in the Netherlands has revealed that private equity is an important asset class for Dutch investors, with 29% of institutions currently investing in the sector. The survey also indicated that the number of institutions investing in private equity is set to increase to over one third (35%) in the next two to five years with average allocation rising from current levels of 3.8% to 4.2%.

The study was conducted by The University of Tilburg and sponsored by fund-of-funds manager, Adveq. It looks at the current and likely future investment behavior of Dutch institutional investors including company pension funds, insurance companies, and banks towards private equity investment. The institutions surveyed represent around €1500bn of assets under management.

Key findings reveal that 10% of Dutch institutions currently commit more than 10% of assets under management to private equity investments. In the next 2-5 years, Dutch investors will increase their allocations to private equity with the number of institutions investing between 2.5% and 5% of assets under management rising from 17% to 26%.

Dutch investors will increasingly look to invest outside The Netherlands, with domestic private equity investment set to fall from 22% to 18% in the next 2-5 years. By comparison, the US will see private equity allocation from Dutch investors increase from 27% to 30% and in the rest of Europe it will rise from 46% to 48%.

The most attractive private equity segments for Dutch institutions in the next 2-5 years will be mainly European development, buyout and venture capital.

Fund-of-funds and direct fund investments are currently the most popular routes to private equity, each accounting for 40% of overall allocation to the asset class. Fund-of-funds are also predicted to be the biggest growth area with 48% of Dutch institutions investing through these vehicles over the next 2-5 years.

Peter Laib, managing director at Adveq, said: “With 29% already investing in the asset class, it is clear that Dutch institutions recognize the ability of the asset class to provide superior returns and they are becoming a significant source of capital to the private equity industry. In addition, as their future allocation to private equity grows, we will see Dutch institutions increasingly focusing on private equity opportunities outside the domestic market.”