Almost nine in ten investors expect to decline to re-invest with their existing general partners over the next 12 months amid tightening liquidity constraints, according to a closely-watched annual survey by London-based secondaries specialist Coller Capital.
Declining limited partner sentiment towards re-investing with existing GPs represents a continuation of the fundraising landscape over 2024. Over the last twelve months, almost four-fifths (79%) of investors say they have declined to re-invest with at least one of their current GPs.
Investors have attributed decisions to decline to reinvest with existing GPs to a variety of factors. 29% say it was due to their own capital availability as an institution – reflecting tightening liquidity considerations for many LPs.
Two-fifths (42%) say the decision was performance-related and 16% say it was due to a change in their institution’s strategy.
The 41st edition of the Coller Capital Global Private Capital Barometer captured the views of 107 private capital investors from around the world. In total, the investors surveyed oversee a combined $1.9 trillion in assets under management.
Almost two-thirds (64%) of investors say they believe that transparency around future call and distribution activity could be improved by GPs, reflecting that investors need to manage cash constraints.
Jeremy Coller, Chief Investment Officer and Managing Partner of Coller Capital, said: “The liquidity crunch and a lull in M&A activity has led investors to exercise a degree of caution when it comes to reinvestments, yet LPs are still showing a strong appetite to expand their allocation to private markets.
“While GPs should heed the call from LPs to provide more transparency on exits and distributions, the increasing prevalence of both private credit and secondaries as key pillars of alternative asset allocation point to a promising long-term growth outlook.”
When looking at the year ahead, 96% of investors plan to increase or maintain their allocation to alternatives overall. 90% plan to increase or maintain their allocation to private equity specifically, while 89% intend to do the same for secondaries.
More than four-fifths (84%) of investors expect to retain or grow their allocation to private credit in 2025. Of those, 37% are planning to increase their allocation to the asset class. Since Coller Capital’s Winter 2022 Barometer private credit has been the alternative to which most LPs anticipate increasing their allocation.
According to the survey, two fifths (41%) of global investors see M&A based growth and add-on acquisitions as the primary driver of value creation within GPs’ portfolio companies over the next two to three years.
Meanwhile, over a five-year horizon, almost three quarters (73%) of investors see digitalisation and AI as the greatest opportunity for private equity firms to add value to their portfolio.
Building on investor appetite for greater transparency in relation to future call and distribution activity, the research finds that almost two thirds (63%) of investors feel that the current exit timelines communicated by GPs are optimistic, with one third (32%) feeling that timelines are realistic.
Almost all investors (91%) are in favour of GPs having a standing exit committee, whereby an internal leadership group collectively decides on exit timing and strategy for the whole portfolio.
