Private equity fund investors continue to expect strong returns
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Illustration: Allie Carl/Axios
Limited partners in private equity funds see sunny skies ahead, according to results of a survey taken before this morning's mostly favorable U.S. inflation report.
By the numbers: 71% of LPs believe that 2024 will be a strong vintage year for both North American and European private equity, according to the biannual Coller Capital Barometer report.
- The figure is just 45% for Asian private equity funds raised in 2024.
- Over half of the 110 surveyed global LPs also expect strong returns from 2023 vintage funds in North America (57%) and Europe (51%), while the figure again dips for Asia (37%).
Why it matters: Private equity fund managers have been fretting about the fundraising environment for the past year, initially driven by public equity value decreases that produced denominator effects.
- Many slowed down their investment pace to conserve committed capital, in the hopes that it would be easier to raise new funds in 2024. According to these results, it might have been a smart bet.
- That said, the fundraising time might be right now for private credit and infrastructure fund managers — with over 40% of LPs seeking to increase exposure to those asset classes over the next 12 months.
Other data points: Around three-quarters of LPs expect more VC down rounds over the next 12 months than during the past 12 months, with the figure jumping to 85% among North American LPs.
- Only 23% of LPs believe the "anti-ESG" movement will cause at least some PE fund managers to deprioritize ESG, with just 4% expecting a "large number" of fund managers to do so. The remaining 77% expects no impact.
- 75% of LPs expect AI to play a role in origination within the next five years, while 64% expect the same for deal assessment and 61% for post-deal portfolio engagement.
