New Study Shows LPs Want More PE –

After stuffing private equity firms fat with cash, limited partners are still clamoring to put more money into the asset class, according to a new survey released by Coller Capital. The London-based secondary firm’s Global Private Equity Barometer found that LPs have increased their appetite for private equity over the last six months and their desire for hedge funds has declined.

According to the survey, 44% of LPs are planning to increase their allocations to private equity, up from 30% six months ago. The study found that approximately 50% of European and Asia-Pacific investors are planning on increasing their allocation to private equity. About one third of North American LPs, who already have a significantly higher share of funds invested in private equity, are also planning an increase.

In ranking the preferred areas of private equity investments, limited partners chose European buyouts as the No. 1 destination for their capital. North American venture funds ranked second, followed by Asia-Pacific buyouts, North American buyouts, Asia-Pacific venture and European venture ranked sixth.

Approximately 66% of the LPs surveyed could not gain the access they wanted to the North American venture capital markets. In comparison, close to 50% of LPs did not have the access to North American buyouts they wanted and just over 20% did not have the access to European buyouts they desired.

Hedge funds’ popularity among LPs is on a slight decline, according to the survey. Thirty percent of LPs planned to increase their allocations to hedge funds, down from 37%, who were looking to increase investments six months ago.

While their enthusiasm for private equity has grown, limited partners are more willing to drop GPs who have not performed well. The survey found that 56% of LPs had decided against re-investing with the same firms over the past year, up from 45% in the last survey. North American LPs were the toughest customers, with 65% of them declining to re-up at some point. Coller Capital’s Global Private Equity Barometer surveyed 109 LPs from a variety of investor types, experience and asset levels and geographic regions.