Private equity must justify its role to sceptics

Survey1Over 40% of endowments and foundations, and more than a third of pension plans, say there are influential individuals within their organisations calling for allocations to private equity to be reduced or cancelled entirely.

This is despite 63% of limited partners (LPs) reporting that net lifetime returns for their private equity portfolios have been 11% or higher, according to the Global Private Equity Barometer survey by Coller Capital, an investor in private equity secondaries.

“Private equity has confirmed its core place in institutional investment portfolios since the crisis,” says Jeremy Coller, chief investment officer, Coller Capital. “However, complacency would be a mistake. With sceptics at senior levels within LP organisations, the industry will have to justify its performance again and again.”

Despite the presence of sceptics, 25% of limited partners say they plan to increase their target allocations to private equity, compared with 14% who plan to reduce it, according to the survey.

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