Two-thirds of private equity investors will have little or no ‘head room’ for new fund commitments by this time next year, according to Coller Capital’s Global Private Equity Barometer.
North American private equity investors will be particularly stretched, with 28 per cent expected to have exceeded their allocation to the asset class by December 2009.
However, overall investor commitment to private equity has not wavered, with 57 per cent of investors expected to maintain and 40 per cent to increase their allocations to private equity in 2009.
According to the barometer findings, between one-quarter and one-third of all private equity investors have begun investing in the asset class since 2000, and many of these are still growing their private equity programs.
Investors’ return expectations for the medium term also remain unchanged, with 43 per cent of investors still expecting net annual returns of more than 16 per cent over the next three to five years.
“With portfolios suffering from both the denominator effect and the distributions drought, [private equity investors] have three options: to increase their allocations to private equity, to cut their commitments, or to seek liquidity through secondaries,” said Coller Capital chief information officer Jeremy Coller.
“In practice, even [private equity investors] without allocation or liquidity problems will seek to access the secondaries market, because many will want to re-shape their portfolios to reflect new economic realities.”
According to the barometer, financial and economic difficulties will not slow the globalisation of private equity.
It showed the proportion of North American investors with 6 per cent or more of their private equity exposure in the Asia Pacific will grow to almost 70 per cent within three years, from a current 41 per cent. European private equity investors will behave similarly, with around one-third currently having an Asia-Pacific exposure of 6 per cent plus, with this expected to rise to almost two-thirds of European investors within three years.
The barometer showed India and China would continue to be the most attractive markets in the Asia Pacific, followed by the developed economies of Japan and Australia.
