Thursday 23rd January 2025
Australian investors set to benefit from bilateral beauty of secondaries market
Secondaries now represent a core pillar of many investors’ alternative assets program, according to Coller Capital.
Investors surveyed in Coller Capital’s Winter 2024-25 edition of the Global Private Equity Barometer are planning on increasing their allocation to a broad swath of alternative asset classes in the year ahead, while secondaries are viewed as a more central part of their portfolios.
96 per cent of investors surveyed planned to increase or maintain their allocation to alternatives overall within this 90 per cent plan to increase or maintain their allocation to private equity, 89 per cent secondaries and 84 per cent for private debt/credit. Limited partners (LPs) surveyed by Coller Capital said that secondaries strategies now represent a core pillar of their alternative assets program, while recent trends also point towards “greater acceptance and understanding” of continuation vehicles (CVs).
“Over half of LPs believe CVs represent an opportunity to maximise value for strong performing assets or retain them for longer in order to extend the investment horizon and capture additional upside,” the Coller report said.
Meanwhile, around two-thirds of investors expect to hone their exposure to private credit, one of the most “dynamic” areas of the alternatives assets landscape over the last decade, by backing a smaller number of managers.
“Given the abundance of options and continued diversification, it is likely that many have gained ample experience across the strategy, identified their ideal niches, and are content to channel their investment capabilities within these specific areas,” the Coller report said.
“North American LPs exhibited the strongest inclination towards achieving a concentration with a smaller number of credit managers, whilst investors from the RoW showed the greatest tilt towards backing a more limited range of credit strategies.”
Closer to home, the APAC region is becoming more attractive to LPs, with two-thirds feeling that the risk/reward equation for Indian private equity is improving, closely followed by Japan and South Korea.
“We found that limited number of established GPs and PE talent overall was perceived by LPs as a key obstacle to PE investment across all three countries in the next three years,” the Coller report said. “Japan and South Korea exhibited a relatively similar profile, with investors acknowledging that escalating competition for deals and hesitance to share ownership in companies could influence private equity investment prospects in these markets.”
