GLOBAL - Institutional investor interest in private equity secondaries market has reached "unprecedented" levels", research by Coller Capital, conducted in conjunction with IE Consulting, shows.
The survey found the industry's secondaries market, which allows investors to sell out of the traditionally illiquid asset class, is rapidly expanding. More than a third of US and Canadian investors are planning to sell private equity assets in the next two years, while just three years ago, only a fifth had ever sold holdings.
The survey said a quarter of European investors - or limited partners - and 42% of those in Asia-Pacific were planning to sell private equity assets via the secondaries market in the next two years.
Interest in the secondaries market as a tool for portfolio re-shaping is visible in investors' buying intentions too, Coller said. Around a third of North American and European investors (30% and 35%) and more than two thirds of Asia-Pacific investors intend to buy in to private equity in the next two years, it added.
Coller Capital CIO Jeremy Coller said: "Investor plans for secondaries sales show the scale of the change coming to the private equity landscape. Compare the situation today with three years ago. One third of North American LPs plans to sell assets in the next 24 months, whereas in the summer of 2008, only one fifth of investors had ever sold.
"When you also look at the proportion of investors looking to buy secondaries; the flood of money targeting new private equity markets; and the accelerating pace of recruitment within LP institutions, it's clear we are working in a rapidly-evolving industry."
The research also found almost half (47%) of public pension funds expect to hire more private equity staff over the next two years, with 14% of corporate pension funds doing likewise.
Meanwhile, European private equity investors were found to have twice as much exposure to China and India as to the more developed equity markets of Australasia, Japan and Korea. Asia-Pacific investors typically held a 53% exposure to emerging markets, compared to 42% in developed regions.
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