LPs expect net returns of at least 11%

But for a quarter of LPs, expectations rose to 16%+ across the same period. Regardless of expected returns, 80% of LPs agreed that buyouts are the safest bet.

"The fact that 86% of investors expect returns of 11-16% really makes you think about the attractiveness of the asset class versus other investment opportunities," says Giovanni Orsi, investment principal at Coller Capital. "Over the last decade, private equity has delivered 12% compared to 8% for public equities and 5-6% for fixed income, real estate and hedge funds. Where else can an LP get these type of returns?"

And it seems the goodwill extends to fee structures too, with two thirds of LPs agreeing that hurdle rates – originally designed against an entirely different economic backdrop – remain fit for purpose and should be maintained at around the same levels for the next 5-10 years.

With 37% of LPs planning to increase their target allocation to private equity – up from 30% this time last year – it makes sense that many of the world's largest investors plan to grow their private equity teams. Unsurprisingly given the increasing frequency of their appearance on the international stage, half of sovereign wealth funds intend to bolster their private equity teams. The same is true of 47% of insurance companies and 44% of asset managers, but only a quarter of pension funds will be reinforcing their workforce.

"Nowadays, when LPs do their due diligence on new commitments, these due diligence sessions are a lot more detailed and specific than they used to be, because new, experienced teams are able to scrutinise GPs better than they did in the past," says Orsi. "LPs want more co-investment, but because co-investment hasn't been as successful as indirect investment in many cases, I think what they want is to get involved in co-investment earlier."

Whether through co-investment or indirect investment, the approach of LPs is changing. Nowadays, the average LP invests 10% of its total private equity commitments directly, either on a stand-alone basis or via co-investment. LPs are undoubtedly convinced by the merits of private equity, but are they enamoured with indirect investment? For the lucky few, it seems LPs are ready to commit to capital calls and invest indirectly. But perhaps GPs should prepare for increasing direct competition from their former supporters.

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