The institutional private equity market looks set to continue its post-financial crisis revolution, with almost nine out of 10 limited partners (LPs) planning to decline re-ups with general partners (GPs) they previous regarded as ‘core’, and more than half ready to invest in first-time funds within the next two years.

The findings, from Coller Capital’s latest Global Private Equity Barometer, a quarterly survey of institutional investors, appear to mark the end of some long-held assumptions about the asset class: access to the most seasoned GPs has for years been considered paramount, given the evidence for persistence of performance from one vintage to the next.

Coller Capital partner Stephen Ziff, referring to the fact 70% of North American LPs and 58% of Europeans expect to invest direct with a first-time fund, said: “Often, talented individuals or teams will leave big franchises that perhaps aren’t offering them the challenges they expect, in order to start up on their own – and LPs that know them well are prepared to back them.

“This highlights the shifting landscape in private equity. There is increasing innovation and discipline from LPs: they are making sure GPs understand that, just because they have supported them in the past, they should not take it as given that they will in the future. And they are looking for new routes into private equity.

“There are a number of factors at play – succession planning, strategy, economics, looking at new themes and geographies.”

In line with this more “disciplined” stance to re-ups, 44% of LPs expect terms and conditions to move even further in their favour, despite considerable concessions from the industry already having been made in recent years.

“Pre-crisis, it was very clear the balance of power was with GPs,” said Ziff. “It’s clear that the pendulum has swung to more of an equilibrium now, and that that is the way LPs expect it to stay.”

Coller Capital was founded in 1990 and is a leading investor in private equity secondaries.

This latest edition of its Barometer is based on a survey of 115 institutional LPs, 45% of which are European and 28% of which are pension funds.

Fifteen of the respondents were pension funds based in Europe.

Other findings suggest that two-thirds of LPs worry that an over-supply of debt in the North American private equity market is resulting in poor deals being financed and some good deals being over-leveraged.

This has increased from 20% in 2012, and the problem is regarded as much less severe in European or Asian deals.

Among all types of LP, pension funds were the most likely to have decreased their private equity allocations over the past two years, and also the most likely to have commitments above their target allocations to the asset classes.

On a lighter note, 64% of respondents from around the world indicated that they would prefer to manage the private equity portfolio of a Canadian pension plan over a US pension plan.

Patriotic Canadians all preferred to work in their home country – but apparently half of US pension managers would like to head north of the border to join them.

“This may have something to do with the fact Canadian pension plans are seen as more flexible and forward-thinking,” suggested Ziff.