Institutional investors remain interested in private markets, but many won’t be re-upping with their current lineup of managers. Given the sharp drop in distributions that investors have been receiving from their existing funds, this makes sense.
Operating in a negative cash flow environment has become a familiar experience for investors. So, perhaps it is not a surprise that nearly 80 percent of respondents have declined the opportunity to reinvest with one or more of their current managers in the last 12 months, according to Coller Capital’s 41st Global Private Capital Barometer.
Nearly 90 percent of respondents expect to forgo reinvesting with some existing private equity firms in the next year due to tightening liquidity, performance concerns (42 percent), limited capital (29 percent), and strategy shifts (16 percent). This trend mirrors 2024, when 80 percent of investors did not reinvest with at least one manager.
Transparency remains a key demand, with 63 percent of investors expressing skepticism about managers' overly optimistic views of exit timelines. Only 32 percent of respondents believed these timelines were realistic.
Investors are advocating for better governance to address this issue. A striking 91 percent support the implementation of standing exit committees — dedicated groups within private equity firms tasked with setting exit strategies and timelines across portfolios.
Still, investor appetite for private credit remains strong. Coller found 84 percent of investors plan to maintain or grow private credit allocations in 2025. Nearly 90 percent of investors aim to sustain or boost allocations to private equity and secondaries.
Regional interest varies significantly, with Asia-Pacific investors showing the strongest enthusiasm for private markets. About half of Asia-Pacific investors plan to boost allocations, compared to 41 percent in Europe and 28 percent in North America.
“Private credit and secondaries continue to emerge as key pillars of alternative asset allocation, pointing to a promising long-term growth outlook,” said Coller Capital’s CIO Jeremy Coller.
Merger and acquisition strategies and digitalization are viewed as critical avenues for driving value creation within portfolios. Coller Capital’s data reveal that 41 percent of global investors see growth through M&A and add-on acquisitions as the primary lever over the next two to three years.
Looking further ahead, digital transformation is poised to take the lead in value creation. Nearly three-quarters of investors anticipate digitalization and AI as the most significant opportunities for private equity firms to enhance portfolio performance over the next five years.
Coller Capital collected the responses of 107 global private capital investors representing $1.9 trillion in assets for its 41st Global Private Capital Barometer.
