Half of private markets investors admit to holding zombie funds

Almost half (48%) of private equity investors have funds they regard as ‘zombie funds’, where GPs are managing out existing portfolios due to an inability to raise new funds, within their portfolios.

That was one of the key findings from Coller Capital’s semi-annual Global Private Capital Barometer, which aims to provide a snapshot of worldwide investor trends in private markets.

The survey also found that 57% of private markets investors say that they are not comfortable with the use of NAV finance in the private equity industry.

It also found that 64% of the investors surveyed believe that at least one of the private equity managers they are currently invested with will merge with or be acquired by another manager during the next two years.

Data from the survey shows that investor appetite for private markets – particularly private equity, private debt and secondaries – remains strong, with a significant number of investors expecting the level of distributions from private equity managers to increase.

One in three (31%) investors surveyed expect that they will increase their target allocation to alternative assets in the next 12 months, while three in five (59%) expect allocations to remain the same.

Investors are most likely to increase their target allocation to private credit (45% of investors), with one third expecting to increase their allocations to infrastructure (33%) and private equity (31%).

In a sign of investors’ desire for further diversification and liquidity, 38% of those surveyed say that they expect to increase their allocation to private markets secondaries.

Jeremy Coller, chief investment officer and managing partner of Coller Capital, said: “These findings are a huge vote of confidence for alternative assets.

“LPs stand ready to not just maintain their allocations but to actively increase them as they seek attractive, long-term risk-adjusted returns. Nowhere is that clearer than in private market secondaries, where LPs have seen the diversification and liquidity on offer.”

The 40th edition of the widely-followed survey captured the views of 110 private capital investors from around the world. In total, the investors surveyed oversee a combined $2.1 trillion in assets under management.

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