Three quarters of LPs have secondaries exposure – Coller

LPs remain keen to allocate to PE even though the perceived risk to returns has risen materially, according to a survey by the secondaries firm.

A large majority of limited partners are now invested in secondaries though some headroom for growth remains, according to Coller Capital.

A total of 77 percent of LPs reported having exposure to the strategy, with 27 percent saying that secondaries accounts for at least 10 percent of their overall PE exposure, according to the summer 2021 edition of the Global Private Equity Barometer published Monday.

Just over 20 percent of respondents said they intend to increase their exposure to secondaries in the next three to five years, with 15 percent planning to increase investments to secondaries in other asset classes.

Overall, the survey shows that LPs are keen to continue allocating to private markets even as the perceived risk to returns has risen materially over the past 18 months.

“There are a number of issues in the world, both economic and political,” Francois Aguerre, a partner with Coller Capital, told affiliate title Private Equity International, citing inflation as a particular concern. “Clearly, in the investor community, that fear is present. We cannot point to anything specific that is a factual headwind or problem in the system, but there is fear in the system.”

While geopolitical problems represent the largest risk to PE returns in the eyes of respondents, the proportion of those who are concerned about the risk of currency fluctuations rose from 0 percent to 62 percent between winter 2020 and today.

The 34th edition of the report captured the views of 111 private equity investors, representing a globally diverse LP population.

– Michael Baruch contributed to this report.