Post-Crisis, Investors Find PE Appealing

Dec 9 2013 | 9:18am ET

Private equity has become increasingly attractive as an asset class in the wake of the 2008 financial crisis, according to new research from Coller Capital.

The firm polled 113 private equity investors for its latest Global Private Equity Barometer and found that 44% of them believe this to be true while 12% believe p.e. has become less attractive.

According to the Barometer, 37% of the investors polled will increase their target allocation to private equity over the next 12 months. Moreover, half of sovereign wealth funds will expand their p.e. teams as will nearly half of insurers and asset managers and one quarter of public pension plans.

The majority (62%) of investors polled think hurdle rates should remain at around their current level for the next 5-10 years while among those who disagree there is no consensus as to whether they should be higher or lower.

Over half (54%) of LPs have co-invested with their GPs in the last two years and two thirds of North American LPs and half of European LPs would like to be offered more co-investments.

On the other hand, only one third of private equity investors invest in GP-sponsored IPOs, largely because many feel IPOs are generally over-priced.

According to the Barometer, the ‘typical’ (median) investor expects a 5% risk premium from private equity over public/quoted equity and is seeking it in growth capital and small-to-mid-market buyouts in North America and Europe, less so in large buyouts and venture capital.

Investors are bearish about market conditions over the next 1-2 years—56% of LPs think the rate of distributions from private equity funds will increase over the next 12-18 months and 42% of investors expect their GPs’ investment pace to increase.

But they remain skeptical about futuristic tech-based ventures: 60-70% of private equity investors dismiss initiatives like asteroid mining and the Los Angeles-San Francisco Hyperloop as “rich men’s vanity projects.”


In Depth

Q&A: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.