Investors are increasing their allocations to private credit and secondaries as macroeconomic and geopolitical risks drive demand for more resilient and flexible investment strategies, according to London-based private capital secondaries specialist Coller Capital’s survey.
The semi-annual survey, based on the views of 110 institutional LPs showed a pivot towards private market segments that offer enhanced liquidity and downside protection.
45% plan to increase allocations to private credit over the next 12 months—up from 37% six months ago. Meanwhile, 37% expect to boost exposure to secondaries, compared to 29% previously. With traditional exit routes under pressure, secondaries deal volume is expected to rise further following a $160 billion market in 2024, shared the researchers.
Two-thirds of LPs anticipate growth in private credit GP-led transactions, particularly in North America, as funds mature and sponsors seek liquidity. Similarly, private equity secondaries continue to attract activity, with over half of LPs planning to buy or sell assets in the next two years.
Geopolitical instability is also reshaping portfolio construction. 88% of respondents cited geopolitics as a significant risk to returns over the next 2–3 years, while 44% said their institutions are now factoring geopolitical considerations more directly into allocation decisions.
Cross-border deals and tech drive European private credit growth
38% of LPs predicting that new manager formation will outpace consolidation, driven by spin-outs from top-performing investment teams. At the same time, 71% of LPs see the rise of mega-funds as a challenge to meeting return expectations.
Over 20% of LPs plan to maintain or grow their exposure to private equity and private credit evergreen funds, as they seek greater liquidity and flexibility traditionally associated with retail capital. 27% of investors expect private capital firms to collaborate with celebrities and influencers to build brand visibility, particularly as they expand into the wealth market.
Jeremy Coller, chief investment officer and managing partner of Coller Capital, commented: “New challenges call for new strategies, so as the world continues to confront increased geopolitical and economic uncertainty, it’s no surprise that investors are exploring alternative options to deliver returns. As Coller Capital’s 42nd Global Private Capital Barometer shows, LPs are continuing to increase their interest in private credit and secondaries and making new forays into evergreens. Once again, our Barometer offers an unrivalled look at the prevailing sentiments of the global investor community, and we are delighted to share the compelling insights it provides on the present and future of private capital markets.”
