LP appetite for EM hits four-year high

Limited partner sentiment towards emerging markets private equity is at its highest since 2014, research has found.

Forty-eight percent of LPs expect to increase their level of new commitments to emerging markets funds over the next two years, up from 45 percent last year and 40 percent in 2016, according to EMPEA’s 2018 Global Limited Partners Survey. The 107 institutions surveyed represent $5.7 trillion in total assets under management across 36 countries.

Thirty-five percent of respondents plan to increase their allocation to emerging markets as a proportion of their total portfolio, up from 29 percent last year.

“Some investors may be looking to emerging economies to avoid overexposure to frothy conditions in core markets,” the report said. The improvement in sentiment may have been skewed down by the composition of this year’s sample, as the proportion of respondents with no allocation to EM PE was almost double that of previous years.

Canada Pension Plan Investment Board is among those ramping up exposure to emerging markets. The C$356.1 billion ($278.1 billion; €235.6 billion) programme had C$9.6 billion invested in emerging markets private equity as of 31 March – a 65 percent rise from its previous financial year.