Key Takeaways
- • Years-long slowdown in private equity exits is delaying distributions, leaving some investors technically over-allocated and pressuring PE fundraising, which is in its second year of slowdown, according to Chief Investment Officer.
- • Mercer's private markets global CIO Michael Forestner says clients are reviewing pacing models, using smaller commitments, adjusting co-investments and turning to secondaries to rebalance.
- • Callan's Jay Kloepfer warns that secondaries "aren't a long-term planning tool" and that sellers should expect to take a haircut, while Callan's Bo Abesamis stresses that every liquidity facility carries a cost.
- • Bloomberg data cited in the article suggests the SpaceX IPO could have a trillion-dollar impact on institutional portfolios once all data is in, with full effects not expected for at least a year.
- • Aon's Bruce Ingram cautions that NAV lending and similar tools must be evaluated for real liquidity and terms, and that evergreen funds risk strategy drift.
Summary
Liquidity planning has moved to the top of institutional agendas, and private equity is the sharpest pressure point. A multi-year slowdown in exits is delaying distributions from general partners, leaving some investors technically over-allocated or near their private equity targets. According to the article, this is already weighing on private equity fundraising, which is in its second year of slowdown. Investors now face trade-offs: skipping a commitment to a GP's next fund because older deals have not returned capital risks missing high-performing vintages, as allocators learned after the financial crisis, while over-committing against a target risks cash that may not return on schedule.
Michael Forestner, private markets global CIO at Mercer, says clients are reexamining pacing models. Options include committing smaller amounts, adjusting co-investment activity and using the secondary market to rebalance. He notes investors are also building longer holding periods into their assumptions.
Forestner expects the rise in 2026 IPOs to eventually help distributions, but warns that a mega-IPO can create its own rebalancing challenge. Citing Bloomberg data, the article says the SpaceX IPO could have a trillion-dollar impact on institutional portfolios. Forestner says full effects will not be clear for at least a year, once lockups expire.
Jay Kloepfer, executive vice president and director of Callan's capital markets research group, argues investors should revisit return assumptions for private equity, noting that returns have been roughly equal to or slightly above public equities in the 2010s. He also questions cumulative exposure across private equity, private credit, real estate and infrastructure, which he says can reach 35% to 40% of a portfolio tied up in capital calls and illiquidity. Secondary market activity is up year over year, but Kloepfer says secondaries are not a long-term planning tool and that sellers will take a haircut. Bo Abesamis, executive vice president and manager of Callan's implementation solutions group, notes that debt issuance is available only to funds with strong credit ratings and that every facility has a cost to be weighed against liquidity needs.
Equity concentration in U.S. indexes is also drawing scrutiny, with some investors questioning whether passive and listed holdings carry hidden risk. Forestner says the issue has come up in client meetings but has not yet changed portfolio construction.
Bruce Ingram, partner and global head of private equity at Aon Investments, says continuation vehicles and NAV loans will likely play a larger role, but that they must be assessed with attention to real liquidity and terms. He calls some NAV lending "the definition of financial engineering" and cautions that evergreen funds could drift from their strategies if they hold assets for longer than typical fund durations. Christian Munafo, portfolio manager for private growth equity at VanEck, expects private markets to become a core consideration for all investors, which would intensify these questions.
Michael Forestner, private markets global CIO at Mercer, says clients are reexamining pacing models. Options include committing smaller amounts, adjusting co-investment activity and using the secondary market to rebalance. He notes investors are also building longer holding periods into their assumptions.
Forestner expects the rise in 2026 IPOs to eventually help distributions, but warns that a mega-IPO can create its own rebalancing challenge. Citing Bloomberg data, the article says the SpaceX IPO could have a trillion-dollar impact on institutional portfolios. Forestner says full effects will not be clear for at least a year, once lockups expire.
Jay Kloepfer, executive vice president and director of Callan's capital markets research group, argues investors should revisit return assumptions for private equity, noting that returns have been roughly equal to or slightly above public equities in the 2010s. He also questions cumulative exposure across private equity, private credit, real estate and infrastructure, which he says can reach 35% to 40% of a portfolio tied up in capital calls and illiquidity. Secondary market activity is up year over year, but Kloepfer says secondaries are not a long-term planning tool and that sellers will take a haircut. Bo Abesamis, executive vice president and manager of Callan's implementation solutions group, notes that debt issuance is available only to funds with strong credit ratings and that every facility has a cost to be weighed against liquidity needs.
Equity concentration in U.S. indexes is also drawing scrutiny, with some investors questioning whether passive and listed holdings carry hidden risk. Forestner says the issue has come up in client meetings but has not yet changed portfolio construction.
Bruce Ingram, partner and global head of private equity at Aon Investments, says continuation vehicles and NAV loans will likely play a larger role, but that they must be assessed with attention to real liquidity and terms. He calls some NAV lending "the definition of financial engineering" and cautions that evergreen funds could drift from their strategies if they hold assets for longer than typical fund durations. Christian Munafo, portfolio manager for private growth equity at VanEck, expects private markets to become a core consideration for all investors, which would intensify these questions.
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