LPs Say "No Mas" To Future Funds, But What About Existing Ones?
Twenty percent of institutional investors plan to decrease their target allocation to private equity over the coming year, according to the latest results of a bi-annual survey conducted by Coller Capital. This is the largest percentage of expectant downsizers since Coller began the survey in 2004, with the group usually representing between just 3% and 6% of respondents. It's worth noting that another 15% or so plan to actually increase their target allocations, although that figure has dropped precipitously over the past two years (it had approached 50% in the summer of 2007). One reason for the decrease is simply that there will be fewer private equity firms in which to invest. LPs expect 28% of today's VC firms and 23% of today's buyout firms will fail to raise a new fund over the next seven years. Those are pretty heady numbers, particularly for a VC industry that already experienced a minor shakeout earlier this decade. Moreover, 84% of LPs report having chosen not to reinvest with an existing GP relationship, compared to just 45% three years ago.
