Private equity investors have higher hopes for their returns this year than a year ago, according to a Coller Capital survey.
One-third of institutional investors surveyed in Coller’s Winter 2010-2011 Barometer, a semiannual report, anticipate annual net returns of 16% or more from their private equity portfolios over the next three to five years. In the winter 2009-2010 report, 29% of investors anticipated such returns.
In the latest report, 87% of investors expect a net internal rate of return of 11% or more, the survey said.
“Last year was a horrible time for raising private equity,” Frank Morgan, president of Coller Capital U.S., said in an interview. “People feel that 2010 and 2011 will be good vintage years and they expect higher returns.”
Thirty-four percent intend to increase their private equity target allocation over the next 12 months, up from about 18% in last winter’s survey. However, the number of investors that plan to decrease their private equity allocations is also up, to 16% from 12%. Last year, the majority of investors, 70%, expected to maintain their private equity allocations during the 12-month period.