Institutional investors have a bullish outlook for the private equity asset class, according to a survey conducted by consultancy Talamore Group. The group surveyed 23 institutional investors and five pension consulting firms in Europe and the US and found that 89 percent of respondents were planning to increase or maintain their exposure to the asset class.
While it has been a tough couple of years for private equity as an asset class, we see continued demand from our institutional investors.
“While it has been a tough couple of years for private equity as an asset class, we see continued demand from our institutional investors,” said David Currie, chief executive of SL Capital Partners, the fund of funds management business that commissioned the research.
“In many cases, [we also see] an increased appetite for specialised expertise that can identify the private equity funds that will generate the most attractive returns in light of recent market conditions,” Currie added.
The positive findings echo comments made by the Joseph Dear, chief investment officer of the California Public Employees' Retirement System, at May’s Milken Institute Global Conference in Los Angeles. Dear stressed that regardless of how CalPERS reorganises its allocation mix – for it may cast aside traditional portfolio silos divided by securities and geographies – private equity will continue to have an important place in the portfolio. “I don't know how we make our return objectives without investing in illiquid assets,” he said.
The research also suggests that the appetite to pursue secondaries strategies is still strong among institutions, with 39 percent of respondents saying they will increase their allocation to secondaries purchases in the next 12 to 18 months.
“The outlook for the secondaries market in 2010 and beyond is positive. As major financial institutions have made headway in reshaping their portfolios we expect to see a greater number of private equity investments available for sale in 2010,” said Currie.