European investors have a stronger appetite to deploy capital than their US counterparts as global LPs expect to allocate more into private equity across the next 12 months.
Rede Partners’ H2 Rede Liquidity Index (RLI) surveyed 165 global institutional LPs, representing over €6trn in assets under management and around €1trn in capital in private equity.
The index gave European LPs an overall score of 69, with 50 points acting as a baseline representing no change in the results, while US LPs landed at 51. The findings widen the gap on sentiment recorded in Rede Partners’ H1 RLI when scores sat at 71 and 56 respectively.
In total, 90 per cent of those surveyed expect to deploy more or the same amount of capital to primary funds over the next 12 months, giving a confident score of 62.
Interestingly, 41 per cent of LPs expect to deploy more capital via co-investment opportunities in the year ahead, with the index giving the result a score of 69, signalling a more positive reaction in comparison to that of primary funds.
Looking across Europe, Benelux investors showed the strongest appetite to deploy capital, receiving a score of 77, while those in DACH sat on 76 points and the Nordic regions showing confidence with a score of 69.
Following an apprehensive six months for UK LPs, their outlook has grown more positive. Confidence towards expected capital received back via distribution has jumped from 30 to a score of 48.
Looking forward, the index showed that 83 per cent of LPs expect distributions to increase or stay the same, showing ongoing confidence. The index’s score in this confidence has jumped from and H1 score of 52 to 57.