What are Global Ltd. Partners Most Concerned About in 2018?

March 5, 2018

We’re a couple months into 2018, and Private Equity International is out with survey results on the question – “What are global limited partners (LPs) most concerned about in 2018″?

Before looking at the results, what would you guess the LP responses are?  Would you guess a recession?  Perhaps trade wars?  A terrorist attack?  A cybersecurity attack on the financial system?

The Survey Results

Depicted in the following sections, the top concerns among global estate and private equity investors interviewed by Augentius indicated that their top concerns were asset valuations, challenges in finding investment opportunities, and market regulation.

The Bearish View

Before getting to the top concerns, the following is a visual of survey respondents’ sentiment regarding the investment climate in 2018 compared to 2017.  Quite interestingly, about half of respondents anticipated the investment climate to weaken in 2018 (yellow half-circle).  Only about 15 percent of private equity investors anticipated 2018 to build on the momentum of 2017 and about 40 percent of respondents saw 2018 being about the same as 2017.

1 Investment Climate Source: Private Equity International

Major Challenges

On the major challenges front, the following is a depiction of the views of limited partners in 2017 (purple) compared to 2018 (yellow).

Interestingly, and consistent with the generally bearish view of the investment climate previously reported, valuation and market regulation issues were more concerning in 2017 compared to 2018.

For 2018, survey respondents placed liquidity issues and the lack of adequate investment opportunities as bigger concerns.

2 Major challenges Source: Private Equity International

A Geographic Breakdown of Investors’ Views

Switching to a geographic view of investors’ views, the following is a breakdown of the general partners’ concerns by continental focus.

On communications with limited partners, American general partners (GPs) place a higher concern on this area, with 27 percent saying it is a challenge compared to just 17 percent for the European peers and 18 percent for their Asian peers.

On cybersecurity, European GPs come out with the highest concern level, with 64 percent of European GPs placing this as a major challenge, while only 9 percent of Asian GPs and 40 percent of American GPs place this as a major challenge.

Switching to exit opportunities, European GPs place much less concern on this issue compared to their American and Asian colleagues.

Perhaps quite surprisingly, American and Asian GPs place a much highest concern on fundraising, 50 percent and 55 percent respectively, than do their Asian counterparts.

Perhaps even more surprising that the fundraising result is the investment opportunities result.  About 57 percent of American GPs are concerned about investment opportunities, while 45 percent and 44 percent, respectively, of Asian and European GPs share such concern.

Lastly, American GPs are much less concerned about market regulation compared to GPs located in Europe and Asia.

3 challenges Source: Private Equity International

Conclusion

In an interesting look at the concerns of limited partners, Private Equity International found that the top concerns among limited partners are asset valuations, challenges in finding investment opportunities, and market regulation.  Interestingly, the results differed by the geographic area of the investor and the general investment sector of the respondent.

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