Limited Partner Survey Reveals Confidence, Optimism for Alternative Investments in 2013

Duff & Phelps recently revealed the results of a survey of limited partners (LPs). The study shows LPs generally feel that private equity has successfully rebounded from the crisis and is positioned for strong performance this year.

Prepared in collaboration with Mergermarket, the Alternative Investments Outlook 2013 report synthesises interviews with 100 LPs operating across North America and Western Europe.

The report also provides a detailed description of the following key findings.

  • Confidence and optimism about the current PE environment:
  • Nearly half of LPs say that their PE investments have surpassed their expectations.
  • Of those LPs who plan to adjust their allocation to PE within the next year, the overwhelming majority (95%) expect to increase the amount apportioned to the asset class.

Enthusiasm about the alternative investments climate in Europe:

  • Northern Europe is most frequently mentioned by LPs as fitting with their investment strategies.
  • More than half of LPs see Southern Europe – including Portugal, Spain and Italy – as offering attractive opportunities.
  • Increased interest in secondary PE commitments:
  • Three-quarters of LPs expect to acquire more secondary commitments.
  • LPs are increasingly looking to side-step general partners (GPs) to provide direct lending to companies

Evolution of GP and LP interactions:

  • Nearly all LPs (98%) are communicating more frequently with their GPs.
  • 63% of LPs cite timeliness of reporting as the most common problem with valuation information.
  • Three out of four LPs asked GPs for greater transparency in the last 24 months.
  • When choosing a fund manager, 70% of LPs said that transparency was the most important factor (ahead of strategy and performance)
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