Coller Capital’s PE Barometer Shows ESG Conviction, Regulatory & Tax Fears

Coller Capital, the UK-based investor in private equity secondary markets, recently released its 34th edition of its Global Private Equity Barometer - a snapshot of worldwide trends in private equity and the report provides some great insights matching AlixPartners' 6th Annual PE Leadership Survey.

Depicting the views of ~111 private equity investors, Coller’s PE Barometer does a great job of representing a globally diverse population that is optimistic about what 2021 and beyond has in terms of getting their portfolios to perform. However, as Francois Aguerre, Coller Capital partner and head of origination mentioned in an interview with PEI, “There are still a number of issues in the world, both economic and political... manifesting themselves in heightened fears in the system.” Aguerre added that anxieties around inflation and other macro drivers have made LPs expect even more divergence in performance from GPs, with two in five LPs saying they will refuse re-ups with weaker-performing managers at a faster rate over the next couple of years.

As we can see clearly from this reproduction of Coller’s PE Barometer findings – the perception of risks to PE returns from regulatory and tax changes (and the new anxiety around currency fluctuations) have increased significantly in the past 18 months. This was reflected in our own 6th Annual PE Leadership Survey with a majority of PE respondents noting that with changes in the political and regulatory regime, they would be increasing focus on agility in reacting to those potential changes.

Just as interesting was a section of Coller’s findings that showed PE investors are seeing ESG as a potentially significant driver of improved returns, with almost 50% of respondents agreeing that a robust ESG policy will boost returns.

While these survey findings stand in contrast to our Survey’s middle market respondents, who did not see ESG policies as being substantial value-additives; they do neatly align with AP’s mega fund findings who widely agreed ESG was a critical driver of future value creation.