Over 40% of US/Canadian institutional investors plan to increase private debt allocations

Written by Adam Cadle

24/01/2024

More than 40% of US and Canadian institutional investors plan to increase allocations to private debt in the next three years and roughly a third plan to grow their private equity holding overall, new research from Coalition Greenwich has shown.

The expected inflows into private debt and equity are part of a broad expansion of private assets within the portfolios of North American investors. Over the past three years, nearly half (47%) of US and Canadian investors raised their long-term target allocations to private equity, and 42% increased allocation targets for private debt.

Roughly a quarter of these institutions also expanded allocation to each of private real estate equity, private infrastructure equity and venture capital, with smaller percentages growing allocations to private real estate debt and private infrastructure equity.

“While the move into private assets is a trend spanning institutional investors of all sizes and types, the biggest North American institutions are moving most aggressively to integrate significant private asset exposures into their portfolios,” said Todd Glickson, head of investment management – North America at Coalition Greenwich.

As North American institutions raise their long-term allocation targets for private assets, they are looking to capitalise on what they see as enticing short-term opportunities. In private equity, for example, institutions see buyout and growth investments as particularly attractive. In private debt, institutions are targeting direct lending, distressed debt and special situations.

Between June and September 2023, Coalition Greenwich conducted the Global Private Markets study. Results for the North America portion of the study were based on 104 telephone interviews (78 in the United States and 26 in Canada) with key decision makers at large institutional investors who have current allocations, target allocations, or have considered investing in private markets.

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