The global economic crisis is pushing down private equity returns, with 37% of investors reporting overall net returns of around 16% vs. a high of 45% in summer 2007, according to Coller Capitals Global Private Equity Barometer, Summer 2009, a survey of 120 private equity investors.
A tenth of limited partners surveyed expect that investors are likely to default on private equity commitments sometime in the next two years. North American investors expect an average default rate of 13%, compared with the 7% of European investors and 8% default rate expected by investors in the Asia-Pacific region. Seventy-four percent of private equity investors expect fewer distributions from their private equity funds in the next year.
Private equity investors do not think we are out of the woods, said Frank Morgan, president, Coller Capital U.S.
Eighty percent of limited partners believe the terms and conditions of buyout funds worldwide will become more favorable to them over the next two years; 65% foresee more favorable fund terms for venture funds.
The survey was taken between March and May by IE Consulting, a division of Initiative Europe (Incisive Media).