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LP allocations to the US set to decrease

Nearly half of limited partners will decrease their target exposures to US private equity as a percentage of their overall private equity allocations, according to a new survey from PEI Research and the Institutional Limited Partners Association.

Limited partners around the world plan on decreasing their allocations to US private equity over the next three years.

The finding is among hundreds in a new research report from PEI Research and the Institutional Limited Partners Association.

According to the report, called the PEI-ILPA Global Limited Partner Survey 2008, nearly half of respondent LPs say they will decrease their allocation to the US relative to other target geographies. Currently, the majority of LPs have the majority of their allocations committed to the US. More than 34 percent of respondents had US target allocations of 70 percent or more, according to the study.

The biggest beneficiaries of this expected US decrease looks to be managers of UK and Western European private equity funds – more than 75 percent of LPs said they would increase their allocations to these geographies over the next three years. In addition, just over 60 percent of respondents will increase their allocations to Asian private equity in the next three years.

The PEI-ILPA survey studied queried hundreds of major LPs about their current and future allocations to private equity, as well as their return expectations from the asset class. The survey also asked LPs about their policies with regard to co-investments, secondaries, first-time funds, funds of funds.

PEI Research is a division of PEI Media, the publisher of PrivateEquityOnline and Private Equity International magazine.

The ILPA is a not-for-profit association serving limited partner investors in the global private equity industry.