These private equity strategies will see large growth in the coming years

Despite a number of difficult years, the prospects for private equity are bright.

In recent years, the private equity market has been characterized by subdued fundraising, a difficult exit environment and returns under pressure from high interest rates.

Despite these stressors, a recent survey from Adams Street Partners reported that 67 percent of institutional investors expect to increase their bets on private markets by 2024. In fact, 88 percent said they believe that private markets will outperform public markets in the long term.

Private market allocations have become a cornerstone in institutional investors’ portfolios over the past decade. From 2012 to 2022, investors poured more and more of their marginal dollars into these markets, leading to annualized growth of 12.8 percent and 14.7 trillion dollars in assets under management.

During the same period, private capital exceeded the growth of public equities and fixed income assets by 2.5 times. Pitchbook recently released a report on these developments in which the data supplier also looked ahead to the possible development of the private markets over the next five years. The following conclusions emerged:

• With 14.7 trillion dollars in assets under management, there is still plenty of room to expand further, according to Pitchbook. The data provider predicts that global private capital will reach nearly 20 trillion dollars by 2028, with upside potential of nearly 24 trillion dollars if the macro environment cooperates.

• Looking at the different investment strategies, growth projections vary. Pitchbook foresees growth for the categories of private equity buyout and growth investments, private debt, secondaries and infrastructure funds. The coming years will be more challenging for venture capital investors and the real estate sector.

• Despite fund-of-funds now having nearly 1 trillion dollars in assets under management, these investment vehicles have recently seen a decline in fundraising that, if sustained, will essentially result in zero growth for this strategy.

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