UK - Coller Capital unveils its Summer Barometer 2006 findings

Sarah
14 June 2006

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The Coller Capital Global Private Equity Barometer Summer 2006 was released on Monday revealing that whilst LPs remain committed to private equity they are becoming increasinly discerning. Over the last three Coller Barometers, the proportion of investors that have refused to 're-up' in their GPs follow-on funds has grown steadily from 45% this time last year to almost two thirds now. In fact, it is reported that one quarter of all LPs questioned plan to increase their direct investments into private companies, bypassing GPs entirely.

Although nearly three quarters of LPs reported net returns of 11% or more from private equity investments over the lifetime of their portfolios, compared to only half 18 months ago, there is doubt as to whether this can last. The aggressive leverage facilitating buyouts is expected to hinder future returns and consequently, LPs expect investment strategies to shift as part of the quest to maintain high returns. LPs see the quoted equity markets as fertile ground for private equity with three quarters seeing the number of take-privates increasing over the next three years. Additionally, buyouts in the Asia-Pacific region are being cited as the most attractive investment opportunities for GPs in the coming year. The message seems to be that the desire to invest in dynamic companies is paramount and will precipitate change in private equity strategy as high returns continue to be energetically chased.

The Coller Capital Global Private Equity Barometer is based on research by IE Consulting.