Key Takeaways
- • Three-quarters of private markets investors say the time required to receive distributions has increased over the past year, according to Brown Brothers Harriman's second annual Private Markets Investor Survey.
- • Despite longer distribution waits, 84% of respondents still intend to increase exposure to private markets over the next two years.
- • Private equity is the most popular strategy for additional investment, selected by 54% of respondents, up 16 percentage points year over year; 44% plan to increase private credit allocations, up from 24% a year earlier.
- • Distribution delays are shaping liquidity management, with investors holding larger cash balances, shifting toward liquid assets, and passing up opportunities, and 66% favouring a four-to-six-year deployment period.
- • Investors are demanding clearer disclosure on redemption restrictions, liquidity calculations and conditions under which managers can suspend withdrawals.
Summary
The survey, conducted in August among 500 institutional investors and wealth advisers across the US, UK, Germany, Switzerland and Japan, found that distribution delays are influencing investors' liquidity requirements and preferred structures. Some 66% favoured a capital deployment period of four to six years, with two- to three-year periods the next most popular option. Evergreen funds were identified as the preferred investment structure, as investors increasingly seek flexibility over when capital can be accessed.
To cope with slower distributions, respondents reported retaining larger cash balances, moving toward more liquid investments, or passing up investment opportunities while awaiting capital from existing holdings. More than a quarter expect private markets to represent over 30% of their investments within five years, and 99% anticipate having some exposure by 2031.
The research also points to growing demand for clearer information on redemption restrictions, liquidity calculations and the circumstances under which managers can suspend withdrawals. BBH said investors want to understand how liquidity arrangements operate in practice, rather than relying solely on the availability of periodic redemption windows. Lata Vyas, head of alternative client solutions at BBH, said investors are becoming more discerning about liquidity despite maintaining their commitment to private markets, and that managers need to provide greater clarity over redemption arrangements and investors' ability to access capital when required.
The survey comprised 250 institutional investors and 250 wealth advisers, so its combined results should not be read as representing institutional LP sentiment alone.
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