A majority, 57%, of private equity investors think there will be a significant technology-market correction within 18 months, according to findings of Coller Capital's latest Global Private Equity Barometer.
At the same time, 64% of limited partners in North America, 59% in Europe and 43% in the Asia-Pacific region think it is a good time to make new private equity commitments. Even so, 57% of North American investors, 32% of European investors and 39% of Asian-Pacific investors said that it is a difficult time to make commitments.
Fifty-nine percent are not likely to refuse to commit capital to an existing general partner's new fund, with the remainder likely to refuse, the survey found. The main reason for refusing to invest in a current GP's new fund — cited by 82% of survey participants — is "weak performance."
Meanwhile, private equity investors said they are earning record private equity annual net returns.
"The percentage of LPs reporting that private equity has generated 11%-plus net since inception is the highest it has been since the global financial crisis," said Eric Foran, New York-based partner at Coller Capital.
Some 67% of limited partners reported net annual private equity returns of 11% to 15% over the lifetimes of their portfolios. Twenty-one percent said their lifetime net annual private equity returns are more than 16%.
Seventy-seven percent of limited partners have exposure to investments on the private equity secondary market, with 50% reporting they have 1% to 10% of their private equity portfolios currently invested in secondaries, 23% currently have no secondary investments, 17% have 11% to 20%, 5% have 21% to 30%, and 5% have more than 30% of in secondary investments.
"The survey results highlight the fact that LPs have now accepted the secondary market strategy as a core part of their private equity portfolios," Mr. Foran said. "A quarter of LPs have north of 10% of their private equity portfolios committed to the asset class. And commitments are expected to grow over time for a fifth of LPs."
Coller Capital executives think the investments on the private equity secondary markets are set for growth.
"There was a very strong rebound in the market overall in the second half of 2020. If 2021 is at the levels forecasted it would be an all-time high in the market," Mr. Foran said.
The secondary investment firm's latest forecast is $90 billion to $100 billion in transaction volume in 2021 compared to $60 billion in 2020, he said. Transaction volume was $85 billion in 2019.
Coller Capital's survey was conducted by Arbor Square Associates from Feb. 8 to March 26. There were 111 survey respondents.
