Coller Capital survey: fund restructurings booming

Opportunities for fund restructuring are rising hand in hand with LP appetite for them

Coller Capital’s latest Global Private Equity Barometer survey shows that four fifths of LPs have been approached with fund restructuring proposals since the 2008 global financial crisis.

The survey obtained its findings from 113 global LPs, a fifth of whom had received more than five proposals, with a similar number actually participating in fund restructuring over that period.

The survey highlights that almost 75 percent of North American LPs and 45 percent of European LPs have committed to debut funds from new GPs since the crisis, with 91 percent of these funds saying that their debut selections have equalled or outperformed the rest of their private equity portfolios.

The research also revealed strong returns from the asset class. Around four fifths of all private equity portfolios delivered annual net returns of over 11 percent across their lifetimes while almost half of LPs achieved net annual returns from North American buyouts of greater than 16 percent.

“Investors are accelerating the natural pace of change in private equity through hyperactive buying and selling in the secondaries market, a demonstrable willingness to support newly-formed GP franchises, and decisions to exit or stay invested in restructured funds, said Jeremy Coller, CIO of Coller Capital. 

LPs’ attitudes to private equity in the Asia-Pacific region have also turned more positive, compared to three years ago, but the survey reveals that doubts remain over China, with one third of LPs believing conditions for investing in private equity have deteriorated since 2008.

Appetite for oil and gas-focused private equity funds has risen, with half of North American GPs saying they would be looking to commit to such strategies within the next three years, following the recent drop in the oil price.   

Co-investments were widely viewed as an established part of the private equity landscape with many of the respondents expecting opportunities to remain plentiful, despite the growing size of many private equity funds.  

Around half of the LPs viewed longer life funds as a potentially valuable option for investors, but the other half believed that private equity’s model was not suited to funds with much longer lives.

In terms of the fundraising environment, over half of the respondents expected the private equity allocation within balanced investment portfolios to increase over the next three to five years, but in the nearer term, half of European LPs and a third of North American ones said their private equity commitments were less than their respective target allocations.