Up to 71% of institutional investors expect to increase allocations to private markets, including private equity and venture capital, over the next five years, according to research from Numis.
The research, which surveyed 200 institutional investors with combined assets under management (AUM) of $4.5 trillion, also revealed 73% of respondents intend to increase focus on growth capital over the next three years, with 20% indicating the pivot to private equity would be extensive.
Almost half of investors revealed they expected to invest at least 10% of their assets in private capital markets by 2030.
“Disruptive, high-growth private companies are reshaping consumer experiences and business processes and because of this they represent some of the most exciting investment opportunities around today. Private market investment has grown six-fold in the last decade, and the number of $1bn+ ‘unicorns’ has increased ten-fold,” said Alex Ham, co-CEO of Numis.
“Given this environment, it is perhaps not surprising to see institutional investors so positive about private capital markets, and that many plan to increase their allocation to this sector,” he added.
Of those that responded to the survey, 65% stated the move would be driven by a greater comfort in illiquid investments and long-term assets, while many also said the increase to growth capital was down to desirable companies increasingly choosing to remain private.
According to the research, many institutional investors expect national governments to make it easier for pension schemes to invest in private companies, while 86% said they expected regulatory changes to facilitate allocations to private markets over the next three years.
Today, European pension funds contribute around 18% of venture capital and growth equity funds. As many has 71% of institutional investors expect this figure to grow over the next three years.
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