Data & Intelligence

2014 Global Limited Partners Survey

Key findings from the 2014 Global Limited Partners Survey include:

  • 41% of LPs* plan to increase the percentage of their total PE allocation targeted at emerging markets over the next two years, higher than the 32% reporting similar intentions in the 2013 survey.
  • 54% of LPs* expect to increase the dollar value of new commitments to EM PE funds over the next two years—a smaller percentage than in 2012 (75%) and in 2013 (60%). A bulk of LPs attribute the increase to their growing global PE portfolios, including the portion directed at emerging markets.
  • 67% of institutional investors view the risk profile of private equity in emerging markets as unchanged over the past year, suggesting that LPs remain relatively unfazed by recent volatility.
  • 78% of respondents assess their EM PE portfolio performance as having met or exceeded expectations for the asset class, compared with 22% who consider their EM PE portfolios as having underperformed.
  • 57% of LPs expect net returns of 16% or more from their EM PE portfolios versus 38% of LPs who expect similar results from their developed market counterparts. Compared to last year’s survey, this finding marks a downward adjustment for emerging markets and corresponds to more bullish expectations for developed markets.
  • China and Latin America (ex. Brazil) funds have the highest return expectations among LPs, with 61% and 56% of respondents, respectively, expecting net returns of 16% or higher for 2013-vintage vehicles.
  • Non-BRIC markets retain the top three spots as the most attractive markets for GP investment for the second year in a row. Latin America (ex. Brazil) regains the lead after it was displaced by Sub-Saharan Africa in last year’s survey. Southeast Asia and Sub- Saharan Africa round out the top three.
  • Southeast Asia is poised to see the greatest influx of new investors over the next two years, while 32% of LPs already active in the region and 31% already active in Latin America (ex. Brazil), plan to expand their current commitments in those markets.
  • Political risk remains the primary deterrent for LPs to begin investing in certain emerging markets, including Russia/CIS, Turkey and the Middle East and North Africa (MENA). For Southeast Asia, Latin America (ex. Brazil) and Sub-Saharan Africa, LPs express concern over the limited number of established fund managers.
  • Growth capital fund strategies continue to remain a focus for investors, with 50% of LPs indicating plans to expand EM commitments to these vehicles over the next two years, followed by 36% of respondents expecting to increase commitments to buyout funds.

*Exludes development finance institutions and EM-focused funds of funds.

EMPEA has served as a useful reference platform for CDPQ by helping to define the eligible universe of fund managers in growth markets. Membership provides background data and a...

Rashad Kaldany | Executive Vice-President and Growth Markets, CDPQ

The developed markets have no equivalent to the role EMPEA is playing as a convener and source of trusted information in the emerging markets.

David Rubenstein | Co-Founder and Managing Director, The Carlyle Group