Since comparable multiples are down, over two-thirds of limited partners believe 2012 will be a good or excellent vintage year, Coller Capital’s latest Global Private Equity Barometer shows.
Investor optimism is so high that three- to five-year return expectations have returned to pre-crisis levels, with one third of limited partners expecting 16 per cent-plus returns and half anticipating 11 to 15 per cent returns over the period.
This hope balances some of the study’s bleakest findings. Around a half of limited partners believe they have so-called zombie funds in their portfolios, where private equity managers with no prospect of earning carried interest are motivated to keep funds going for management fees alone.
Unfortunately for European general partners, the eurozone crisis is turning investors off the region. One-fifth of limited partners from around the world say they plan to cut their exposure to private equity in the region because of uncertainty surrounding the debt crisis.
At the same time that general partners will find it as tough as ever to raise new funds, 87 per cent of limited partners have already received investment period extension requests for some funds in their portfolio, while 78 per cent expect to receive more requests in the next three years.
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