Nearly three-quarters of private equity investors, 73%, expect the largest private equity managers will increasingly capture a growing proportion of total commitments over the next five years, according to the Coller Capital Global Private Equity Barometer survey results released Monday.
Only 5% expect the mega private equity firms' share of investor commitments to decrease, according to the survey of 107 respondents from Feb. 10 to March 27. Most of the investors, 55%, do not expect to change the number of general partner relationships, while 39% of limited partners anticipate expanding the number and 16% plan to decrease the number of manager relationships over the next two to three years.
More investors are satisfied with their private equity managers' transparency than in the 2008 financial crisis. Some 82% of investors surveyed are satisfied with the transparency of their GPs' disclosures and communications, compared with 40% of investors that were satisfied in the summer 2009 survey. Meanwhile, 52% of LPs are unlikely to require their private equity managers to use portfolio valuations by independent third parties, while 27% are likely to require third-party valuations. Another 21% already require independent valuations.
However, the survey revealed that investors do have concerns with regard to their GPs. Sixty-seven percent of LPs are very concerned that earnings before interest, taxes, depreciation and amortization boosted by such things as possible future revenues materially inflate the risk of private equity investments. Another 33% are not overly concerned.