Investors' private equity allocations to secondaries increased year over year, despite growing geopolitical concerns, as confidence in valuations rose and recession fears eased, according to Montana Capital Partners' Annual Investor Survey 2024.
The survey sought feedback from a variety of GPs and asset owners and allocators, including banks, asset managers, pension funds, insurance companies, family offices, foundations, and endowments about their outlook on private equity and in particular the secondaries market. While the percentage of respondents actively investing in secondary funds decreased to 69% from 72%, the number of investors allocating more than 25% of their private equity investments to secondary strategies increased.
For institutional investors, 13% have earmarked over 25% of private equity allocations to secondaries, compared with only 8% a year ago, respondents to the mid-market private equity secondaries manager’s survey said. Meanwhile, the percentage of family offices and foundations with secondaries allocations surpassing 25% rose year over year to 12% from 10%, according to the survey data.
Secondaries, along with mid-market buyout and private debt were identified by respondents as strategies showing resilience to economic uncertainties and a high-interest-rate environment. Investors thus said they prefer allocating capital to these strategies, especially considering the ongoing challenging market conditions. Accordingly, the outlook for the secondaries market is bullish, with 84% of the respondents expecting significant improvement in transaction volumes.
"We expect GPs to continue pursuing continuation vehicle exits, particularly via single-asset transactions. This will drive volumes up, but at the same time, investors will need to undertake thorough asset-level due diligence to select the right opportunities," Montana Capital, which manages €3.5B (~$3.69B) of assets according to its website, concluded.
Source: https://www.montana-capital-partners.eu/articles/private-equity-in-the-spotlight-mcp-presents-the-results-of-its-12th-annual-investor-survey/
