The secondary market for institutional investors is about to heat up, with up to one-third of private equity investors preparing to sell assets, according to Coller Capital research.
In Coller Capital’s latest Global Private Equity Barometer, it canvassed the opinions of 110 private equity investors. The term “private equity” is used as a generic description covering venture capital, buyout and mezzanine investments.
The report is a snapshot of trends within private equity. One of the key findings is that the secondary market for institutional investors (referred to as ‘Limited Partners’ or ‘LPs’ in the report) looks likely to heat up, with over one-third of North American LPs, one quarter of European LPs, and as many as 42 per cent of Asia-Pacific LPs planning to sell assets in the secondaries market in the next two years. These levels represent a new record for secondaries – in the Summer 2008 Barometer, only 22 per cent of investors had ever sold in the market.
Additionally, the survey highlights that almost two-thirds of European LPs’ Asia-Pacific private equity exposure is to China and India. European LPs are twice as exposed to China and India as to the developed markets of Australasia, Japan and Korea – 63 per cent versus 31 per cent of their exposure, respectively. The Asia-Pacific exposure of North American investors is more balanced, with 53 per cent in the emerging markets of China and India, and 42 per cent in the developed markets. Asia-Pacific LPs have a relatively greater exposure to developed Asia-Pacific markets, at around 57 per cent.
LP commitments to Australasia and Korea look set to grow, with almost a quarter (23 per cent) of LPs planning to increase their exposure to Australasian private equity in the next two years – as do 18 per cent of LPs to Korean private equity. In Japan, LPs’ exposure is likely to stagnate or shrink, with 11 per cent planning to reduce exposure, versus 9 per cent planning an increase.
