Private Markets to Double to $18.3 Trillion by 2027, Preqin Says

(Bloomberg) – Private capital strategies will double assets under management over the next five years, even as the fast-growing industry adapts to a new macro environment, according to data provider Preqin.

Private capital markets, which encompass private equity and private capital, have boomed over the past decade as investors chased returns in an era of fiscal stimulus and ample liquidity. Despite this year’s market crises and challenging outlook, with borrowing costs rising and the economy slowing, “demand for private capital remains resilient,” Preqin said in a report Wednesday.

The industry’s global assets under management are expected to nearly double from $9.3 trillion at the end of 2021 to $18.3 trillion by the end of 2027. The forecast sees the compound annual growth rate slowing from 14.9% to 11.9% per year in 2021-2027 before 2015-2021.

Also Read :  Futures fall to start week with key inflation data, earnings ahead

According to Preqin, demand remains strong as investors continue to look for alternative sources of return in an uncertain economic environment.

“We expect more sustained growth in asset classes that have historically performed well in more volatile markets and can provide inflation protection, such as infrastructure, natural resources and private debt,” said Christoph Knaack, Preqin’s chief executive officer.

Also Read :  Rouble hits 1-month high versus euro as Russian markets recover ground

hit banks

Preqin expects global private equity fundraising to fall 21.5% in 2022 after a stellar performance of $561 billion in 2021. Private debt is also expected to grow at a slower pace, but at an all-time high of $2.3 trillion -Dollars in assets under management to reach late 2027.

Private debt investors have won a string of high-profile deals this year as investment banks become more cautious while high yield and leveraged bond markets remain shaky. Businesses for companies like Ping Identity and Corden Pharma turned to direct lenders for funding.

Retail investors are expected to be an engine for private capital, according to Preqin, as they are still underinvested in the asset class. Major private credit fund managers, including Blackstone Inc. and Apollo Global Management Inc., have borrowed into the retail market and have products targeted at high net worth individuals.

Also Read :  Stocks Head Lower as Jobless Claims Rise

“Fundraising for retail investors comes as a growing proportion of institutional investors move closer to their long-term strategic asset allocation for private capital,” the report said. “Regulators in the US and Europe in general have been proactive in supporting increased retail investor demand for private markets.”

©2022 Bloomberg LP

Leave a Reply

Your email address will not be published.