GLOBAL - Over 80% of global institutional investors plan to add new private equity managers to their rosters in the next two to three years, new research shows.
Coller Capital's Global Private Equity Barometer, released today, finds the drivers for the new searches vary by region. Just over 40% of limited partners in Europe and Asia, markets that are less developed than the North American market, are still growing their private equity investments.
This compares to about 10% of North American investors who cited the same reason. Instead, nearly 40% of North Americans said they are reshaping existing portfolios. Across regions, however, most investors said it is their policy to find new relationships.
Secondary private equity manager Coller Capital surveyed 120 private equity investors from around the world. The findings show an increased optimism in the private equity market, with a third of investors expecting returns of 16% from their investments over the next three to five years, as opposed to 29% with similar expectations a year ago.
Meanwhile, 34% of investors are looking to increase their target allocation to private equity in 2011.
"Post-crisis, people are looking to get more invested in the asset class," said Michael Schad investment principal at Coller.
However, for pension funds, a lack of resources could prevent them from fully taking advantage of the asset class. Half of the corporate and public pension funds interviewed said they could improve their returns if they had more investment staff.
"Pension funds are longstanding investors in the asset class....Many have had some sort of expenses cap that has prevented them from having more staff. They don't feel they have the time to look at each individual relationship," said Schad.
He said one conversation with an institutional investor revealed the investor estimated 70-80% of his resources were used to manage existing relationships, rather than finding new ones.
A handful of industry heavyweights have begun trialling a so-called 'mid-life MOT', with positive initial results reported by all those involved.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.