The Barometer, which surveyed 108 LPs worldwide, highlights the growing influence of geopolitics on private markets allocation decisions. Jeremy Coller, Chief Investment Officer and Managing Partner of Coller Capital, remarked, "Recent high-profile public market moves have put the exit window back at the centre of the conversation. That is encouraging, but it would be wrong to see IPOs and secondaries as competing routes to liquidity."

This geopolitical influence is particularly pronounced among European and Asia-Pacific investors, with nearly half of those surveyed indicating it affects their decision-making. Specifically, 46% of European and 47% of Asia-Pacific investors acknowledged that geopolitical factors are more influential now than in the past. This trend underscores the growing complexity of the global investment environment.

Despite these challenges, the commitment to private markets remains robust. A substantial 33% of LPs surveyed plan to accelerate their rate of commitments to private markets, while 57% expect their pace to remain steady over the next two years. However, a shift in strategy is evident, with almost a quarter (23%) of LPs planning to reduce the number of GP relationships in their portfolios over the next three years, up from 16% in 2020.

The survey also sheds light on the evolving dynamics within the private markets. One area of focus is exit timing, where LPs are divided. While 40% of LPs believe GPs are generally achieving the right balance between liquidity and value creation, 39% argue that liquidity is not provided early enough, and 22% feel that some of the best companies are being sold too soon. This divergence reflects the ongoing debate about the optimal timing for exits in private markets.

"Secondaries have become a core route to liquidity and a central part of how LPs allocate, rebalance portfolios and retain exposure to assets they continue to have conviction in," Coller added. The Barometer indicates that continuation vehicles have become an established feature of private markets, with 40% of LPs expecting new continuation vehicle activity to increase even as traditional exit channels improve.

The report also highlights the rise of 'zombie funds,' with more than half (54%) of LPs expecting an increase in such funds in their portfolios over the next two years. In response, LPs are adopting pragmatic approaches, with 54% favouring management fee step-downs in no-fault situations. Manager incentive resets and manager removal are less popular options, each supported by 18% and 11% of LPs, respectively.

In the realm of private credit, the Barometer notes a shift towards more selective investment strategies. While the proportion of investors planning to increase their target allocation to private debt has decreased from 42% to 29%, private credit secondaries are anticipated to experience significant growth. LPs rank private credit as the asset class most likely to see proportional growth in the secondary market over the next three years, ahead of private equity, infrastructure, and venture capital.

"Two-fifths of LPs in this Barometer expect continuation vehicle activity to keep growing even as traditional exits recover," Coller noted, highlighting the structural shift towards secondaries in the market.

The role of artificial intelligence (AI) in private markets is also examined in the report. While 70% of LPs expect GPs to use AI primarily as a cost-efficiency tool over the next five years, 67% believe AI adoption will widen return dispersion between leading and lagging performers. Despite technological advancements, the findings underline that private markets remain a human-led asset class, with 61% of LPs stating that gut instinct remains an important factor in fund and co-investment decisions.

As the private markets landscape continues to evolve, LPs are also exploring new investment vehicles. Nearly three-quarters (73%) of respondents expect the proportion of assets under management held in evergreen vehicles to increase by 2035. In contrast, tokenised funds remain a niche interest, with 85% of LPs expressing scepticism about accessing private markets investments through tokenisation.

The Coller Capital Global Private Capital Barometer provides a comprehensive overview of the shifting dynamics in private markets, highlighting the interplay between geopolitical factors, investment strategies, and technological advancements. As investors navigate these changes, the emphasis on manager selection and strategic allocation is likely to remain a key focus in the years ahead.