Seventy-one percent of limited partners and 55% of general partners believe limited partners have unrealistically high return expectations of private equity, said the Palico Global Private Equity Compass — a survey of 159 general partners and 92 limited partners.
Palico is an online marketplace for the private equity fund community, covering primary and secondary funds and co-investments.
A larger percentage of general partners, 42%, expect private equity returns to rise modestly, and 23% expect significant return increases over the next three to five years. Only 27% of limited partners expect modest return increases, and 6% anticipate significant return increases in the same time period.
Meanwhile, 38% of limited partners expect returns to fall at least modestly, with another 2% expecting a significant drop in returns over the next three to five years. Thirteen percent of general partners anticipate a modest drop, with 1% expecting a significant drop in returns.
More than one-third of limited partners (39%) and general partners (40%) believe prices for private equity assets are unreasonably high.
Sixty-eight percent of limited partners see a conflict of interest with general partners' fiduciary duties from private equity fund restructurings, in which investors inject new capital into a fund and extend the life of a fund. Thirty-four percent of general partners indicated there is a conflict, with 66% indicating fund restructurings pose no conflicts of interest.
Palico executives conducted the survey between July 29 and Sept. 14.