LPs have shown to be cautious in recent years in selecting GPs within private markets, with geopolitics playing an increasing role, according to the Coller Capital Global Private Capital Barometer.
Almost a quarter (23 per cent) of LPs expect to reduce the number of GP relationships across their private markets portfolios over the next three years, compared with 16 per cent in 2020.
Despite this, a third (33 per cent) expected to accelerate their rate of commitments to private markets, while 57 per cent expect their pace to remain the same over the next two years.
Just over a third (37 per cent) of surveyed LPs say the geopolitical environment and outlook are influencing their private markets allocation decisions more than in the past. Recent areas to affect the market include uncertainty over US tariffs, and ongoing wars in Ukraine and Iran.
Private credit secondaries are expected to be the fastest-growing part of the secondary market over the next three years, reflecting the continued maturation of the asset class.
Additionally, four in ten LPs expect new continuation vehicle activity to continue increasing even when traditional exit channels improve.
Jeremy Coller, chief investment officer at Coller Capital, says: “Recent high-profile public market moves have put the exit window back at the centre of the conversation. That is encouraging, but it would be wrong to see IPOs and secondaries as competing routes to liquidity. Secondaries have become a core route to liquidity and a central part of how LPs allocate, rebalance portfolios and retain exposure to assets they continue to have conviction in.”
Earlier this year, the Bank of England launched its second system-wide exploratory scenario, to build a clearer understanding of how private markets behave under severe but plausible stress.
The Coller barometer surveyed 108 LPs from around the world, more than half (55 per cent) of whom had more than $10bn under management, and which collectively oversee over $2trn in assets.
