Geopolitics are becoming a more important factor in private markets allocation decisions, especially investors in the Asia Pacific region, according to a recent survey by Coller Capital.

Over a third (37%) of investors surveyed in Coller Capital’s Private Capital Barometer said the geopolitical backdrop and outlook are influencing their private markets allocations more than in the past.

In Asia Pacific, almost half (47%) of investors said they are now more influenced by geopolitics, alongside 46% of European investors, compared with just 23% of North American respondents.

Although private markets are typically an asset class that investors use to mitigate volatility from short-term shocks, geopolitical factors are being considered more when capital is deployed.

Peter Kim, partner and head of APAC at Coller Capital, said: “This Barometer makes clear that Asia Pacific investors are navigating a different set of considerations to their peers elsewhere.”

“Geopolitics is weighing more heavily on allocation decisions here than in North America, and APAC investors continue to show strong appetite for secondaries as a way to actively manage their portfolios.”

“It’s a reminder that the LP [limited partner] base is not monolithic — and that regional perspectives are becoming an increasingly important part of how private markets evolve.”

Despite the geopolitical uncertainty, investors remain committed to deploying capital into the asset class given the role of private markets in portfolio diversification, according to the survey.

Roughly one third of respondents said they expect to accelerate their commitment pace in the next two years, while 57% expect it to remain the same.

However, when it comes to private credit specifically, investors have cooled compared to six months ago when 42% expected to increase allocations versus 29% in the latest poll.

At the same time, investors are becoming more selective in their choice of manager, with almost a quarter (23%) expecting to reduce the number of private capital fund manager relationships over the next three years, compared to 16% in 2020.

However, Asia bucks this trend, with at least half (53%) of regional respondents expecting to increase the number of private capital fund manager relationships within the same period.