Nearly 80% of private equity limited partners have been involved in a fund restructuring since the beginning of the financial crisis, states the summer 2015 version of Coller Capital’s Global Private Equity Barometer released Monday.
Roughly the same percentage of private equity limited partners have received proposals from their general partners to restructure funds during the same time period, says the biannual survey conducted by Coller, which invests in the private equity secondary market.
“LPs are seeing more and more fund restructurings,” said Paige Brotherton, principal in Coller Capital’s New York office.
Fund restructurings provide private equity fund investors “with an opportunity to take liquidity or roll over into restructured funds,” she said. “LPs can cash out or stay in a fund under slightly different terms, often in the form of an extended fund life.”
Seventy-four percent of European LPs expect private equity’s share of their entire portfolio to grow in three to five years. By comparison, 56% of North American limited partners and 43% of Asia-Pacific investors have the same expectation.
Some 95% of LPs have earned since-inception net internal rates of return of 11% or more from their private equity portfolios.
Meanwhile, 53% of North American LPs consider private equity fees acceptable, compared to 52% of European LPs and 30% of investors in the Asia-Pacific region.
“The vast majority of North American private equity investors have achieved net returns north of 11% over the lifetime of their portfolios, and as a group their returns have been stronger than those of European LPs,” Ms. Brotherton said. “This may make them more willing to pay private equity’s fees. The economic environment in Europe is also still difficult, and there is a significant burden of regulation and oversight. It could be that this is making LPs (there) increasingly sensitive to the level of fees they are paying.”
Some 113 private equity investors responded to the survey conducted in March and April by Arbor Square Associates, an alternative investment research firm, for Coller Capital.