Private equity investors are anticipating a good year for the sector in Europe in 2023, followed by a stronger year still in 2024.
Half (51%) of the respondents to Coller Capital’s latest Global Private Equity Barometer indicated they expected a stronger outcome for European private equity in 2023, rising to 71% for 2024. This was broadly similar to investors’ view on private equity in North America, but far ahead of those in Asia.
The survey also found that European respondents were allocating more resources to due diligence than their North American and Asia-Pacific peers, with three-quarters (72%) reporting increased due diligence compared with 48% and 64%, respectively. It also found that a similar proportion of European respondents already have dedicated personnel responsible for ESG within their institutions. Conversely, three quarters of North American limited partnerships (LPs) say they have no plans to appoint dedicated ESG professionals.
“The level of diligence investors undertake has increased over the past two years, with more European LPs increasing their levels of diligence than their peers in North America and Asia-Pacific,” Coller Capital observed. “Due diligence for fund commitments is a key reason for LPs returning to levels of travel not seen since pre-Covid days.”
It added: “Investors are also likely to travel to attend conferences and AGMs, with fewer LPs planning to return to their historical office commute. When it comes to the fund investment process, three-fifths of investors are finding negotiating terms a challenge, but less so assessing managers or accessing funds. Their views are split on the importance of incentives when committing to a first close.”
According to Coller Capital, its latest survey assessed the plans and opinions of 110 investors in private equity funds. It added that these investors, based in North America, Europe and the Asia-Pacific region (including the Middle East), comprise a representative sample of the industry population worldwide.