Concerns about the impact of macro events on private equity returns have not discouraged investment in the asset class, Coller Capital‘s latest limited partner survey has found.
Three-quarters of LPs believe that global trade disputes will harm private equity returns and 44 percent believe the UK’s exit from the EU will bring no new investment opportunities, according to the secondaries firm’s Global Private Equity Barometer for Winter 2018-19.
At the same time, 41 percent of European LPs and 28 percent of North American LPs expect to increase their target allocations to PE over the next 12 months, with 70 percent of respondents believing that PE-backed companies will perform better than their non-PE-backed counterparts in the case of downturn.
“The responses investors have given on Brexit and trade disputes, coupled with volatility in markets, means you get a picture that people are starting to worry a little bit,” Coller partner Remco Haaxman told Private Equity International. “But when we asked the question ‘Are you preparing for a downturn?’, I would have expected to see an even higher number saying ‘Yes, we are adjusting our investment strategy’.”
Just over half of respondents are actively modifying their investment strategies as a precaution against a downturn, the survey revealed.
The Coller Barometer is based on responses from 110 LPs from North America, EMEA and Asia-Pacific.
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