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Private Equity

Private equity investors revamping portfolios in anticipation of slowdown – survey

Some 53% of private equity investors are adjusting their portfolios for the next economic downturn, according to Coller Capital's Global PE Barometer Winter 2018-2019, the latest of the alternative investment manager's semiannual limited partner surveys.

Sixty-four percent of limited partners based in the Asia-Pacific region indicated they are modifying strategies and asset allocations as a precaution against an economic downturn, compared to 51% of North American LPs and 50% of European investors.

Indeed, 70% of investors think private equity-backed companies will fare better than non-private equity-backed companies in a downturn. Thirty percent of survey respondents disagreed.

Even so, 49% indicated that the large number of unicorns — early stage companies valued at $1 billion or more — is "uncomfortably close to the risks of the dot-com era," the survey results showed.

Sixty percent of European limited partners and 32% of North American investors expect to increase their allocations to alternative investments overall in the next 12 months. Some 56% of European and 44% of North American investors anticipate increasing their infrastructure allocations, while 54% of European limited partners and 29% of North American LPs plan to increase private debt/credit allocations and 41% of European and 28% of North American investors expect to increase their private equity allocations.

Meanwhile, the percentage of investors with managed accounts rose to 42% from 35% in the Winter 2015-'16 Barometer and 13% from the Summer 2012 survey.

The survey was taken over a six-week period starting in mid-September by Arbor Square Associates. Some 110 limited partners responded to the survey.