According to the Global Private Capital Barometer developed by Coller Capital, 9 out of 10 Limited Partners plan to refuse to reinvest with some of the General Partners in their current portfolio over the next 12 months.
- Data collected by Coller Capital indicates that over the next 12 months, the majority of Limited Partners will decline reinvestment proposals from General Partners with whom they have already invested.
- Investors cite the availability of capital as one of the main reasons for the move, amid tightening liquidity conditions.
- Investors are demanding more visibility regarding upcoming capital calls and distributions to help them better manage cash flows.
- Most investors believe that the exit deadlines communicated by GPs are too optimistic.
- Despite liquidity constraints, investor appetite for private markets remains strong.
Nearly 9 in 10 (88%) investors (Limited Partners or LPs) plan to refuse to reinvest with some of the General Partners (GPs) in their current portfolio over the next 12 months, given the tightening of liquidity constraints, according to the Coller Capital’s Global Private Capital Barometer.
This investor sentiment towards reinvesting with existing GPs confirms the trend observed in fundraising over 2024. Over the last twelve months, nearly four-fifths (79%) of investors say they have refused to reinvest with at least one of their current GPs.
Investors motivated this decision by several factors. For 29% of them, this decision is due to the lack of availability of their own capital as an institution, reflecting increasingly strict liquidity considerations on the part of many investors. Two-fifths (42%) indicate that this decision is linked to performance and 16% to a change in strategy of their institution.
This 41e edition of the Barometer collected the opinions of 107 private capital investors spread across the world. In total, the investors surveyed manage $1.9 trillion in assets.
Nearly two thirds (64%) of investors consider that GPs could improve visibility on upcoming capital calls and distributions, which illustrates the liquidity constraints they face.
For François Aguerre, Partner, Co-Head of Investments and Global Head of Origination: “Given the contraction in available capital following a period of increased illiquidity, investors need to think more carefully than ever about how they will deploy their funds. In this context, investors want more visibility regarding upcoming capital calls and distributions and, in our experience, they will continue to use the secondary market as a route to liquidity.”
For the coming year, 96% of investors plan to increase or maintain their allocation to alternatives overall. Ninety percent plan to increase or maintain their allocation to private equity in particular, while 89% intend to do the same for secondary funds.
-The other themes mentioned in this edition of the Barometer are as follows:
Private credit remains popular
More than four-fifths (84%) of investors plan to maintain or increase their allocation to private credit in 2025. Among them, 37% plan to increase their allocation to this asset class. Since the Winter 2022 edition of the Coller Capital Barometer, private credit is the alternative asset class to which most LPs plan to increase their allocation.
Value creation fueled by mergers and acquisitions and digitalization
According to the Barometer, two-fifths (41%) of global investors believe that growth from M&A and add-on acquisitions will be the main driver of value creation for companies in GP portfolios over the next two to three years. next years. Furthermore, over a five-year horizon, almost three-quarters (73%) of investors see digitalization and artificial intelligence (AI) as the biggest opportunity for private equity firms to add value to their wallet.
LPs doubt GP release schedules
Building on investors’ appetite for greater visibility regarding future fundraising and distribution activities, the study reveals that almost two-thirds (63%) of investors believe that delays in fundraising current outputs communicated by the GPs are optimistic, compared to a third (32%) who consider these timetables realistic. Almost all investors (91%) support the establishment of a permanent exit committee, under which an internal management group would collectively decide the exit schedule and strategy for the entire portfolio .
