Institutional investors expect almost every aspect of private equity to grow in the coming year, according to Coller Capital’s latest Global...

Institutional investors expect almost every aspect of private equity to grow in the coming year, according to Coller Capital’s latest Global Private Equity Barometer. Levels of competition in established markets will drive them to increase their investment in emerging markets significantly over the next three years though, according to the survey. And, say Collers, hedge funds will pose a serious challenge to private equity firms in the year ahead, but in the longer term they will be unable to compete. Private equity allocations from institutions are up to 44 per cent, from 30 per cent 6 months ago. Hedge fund allocations have slowed over the same period – 30 per cent are planning increased allocations to hedge funds, down from 37 per cent six months ago. Investors are also becoming increasingly active in their search for winning strategies: 58 per cent are planning new private equity relationships in the coming year, and for the first time more than half of the institutional investors said they had recently refused to “re-up” with some of their current fund managers – up from 45 per cent six months ago. The growing appetite for private equity is underpinned by investors’ increasing satisfaction with returns across most categories of private equity and with the strong flow of distributions from private equity funds – which 53 per cent of investors expect to accelerate over the coming year.