S&P Global Market Intelligence Retrieved from: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/private-equity-managers-expect-another-boom-year-in-2022-68394243, [3] Preqin Pro, (as of 07/02/2022). Together, we achieve extraordinary outcomes. Infrastructure and natural resources grow and evolve, Private markets advance their ESG agendas. 2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGES CONTENTS CEO's Foreword - Mark O'Hare 4 1: 2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT Keynote Address - Joseph Bae, KKR 6 Keynote Address - Capturing Megatrends Growth through Minority Stakes - Stanislas Cuny, Amundi 8 2: OVERVIEW OF THE PRIVATE EQUITY . For real estate, 2022 was a year of relative highlights and challenges, with previously-struggling sectors finding stability, and top-performing sectors slowed by tailwinds. Indeed, LatAm grew by an outstanding 225%, to $19.5 billion in 2021 from almost $6 billion in 2020, with the top 12 deals accounting for a third of the total deal value in the region. Infrastructure and natural resources fundraising rose to an all-time high of $158 billion, benefiting from the closing of a record five funds of more than $10 billion. Performance of every private markets asset class declined relative to 2021 but continued to outperform public market equivalents at current marks, though private market valuation changes often lag those in public markets. MSIM announced today that it has held the final close of Ashbridge Transformational Secondaries Fund II (Ashbridge II) at $2.5 billion of total capital commitments. ESG still clearly faces challenges in its implementation, such as the lack of standardized performance reporting, and will certainly require time before all companies can be on board. 43% were Private Equity Firms, 29% were Venture Capital firms and 28% were firms doing both Private Equity and Venture Capital investments. PDF PREQIN GLOBAL - bebeez.it In a year when other private classes fell back to earth somewhat, private debt set a new fundraising record, led by several megafund closes. (As of 31/01/2022). There was a notable drop in private debt deal volumes, driven by the slowdown in PE and only partially offset by market share gains taken from bank and syndicated financing channels (Exhibit 8). Office, retail, and hospitalitythe sectors most affected by pandemic-driven changes in working, shopping, and travelingshowed signs of emerging stability. Retrieved from: https://www.spglobal.com/esg/insights/key-esg-trends-in-2022. MSIM announced today that the 1GT climate private equity strategy (1GT) co-led a $50 million Series B funding round for Everstream alongside existing investors StepStone Group and Columbia Capital. Real estate deal volume declined 20 percent to $1.1 trillion, also the second-highest year on record. Valuation multiples have been falling across both public and private markets, with venture capital positions arguably the most . Still, private markets outperformed public markets on the way down, whether due to truly more resilient portfolios, a lag in timing, or manager discretion over their marks (private markets tend to mark up less quickly during ascending markets and mark down less quickly in falling markets). The deal-making momentum of 2021 continued through the first half of 2022, and despite the striking slowdown in second-half deal activity, 2022 remained the second most active year on record. Registered No. Institutional investors sought out the asset class for various features that are attractive in times of market volatility: current yield, floating rates, and relative insulation (via its senior position in the capital stack) from declining valuations. [2] Private equity managers expect another boom year in 2022. Private equity surged ahead with soaring deal and exit values. Exit volume fell sharply, as sponsors chose to hold assets rather than sell into a declining-valuation environment. Vikram Raju discusses five key findings from COP27. According to our latest Global Private Markets Review, private markets faced a year of two halves in 2022, with buoyancy in the first half and plummeting deal volumes, declining performance, and falling valuations in the second. Andrew Slimmon, Lead Portfolio Manager der Fonds und Strategien des Applied Equity Advisors Teams, teilt seine Einschtzung der Finanzmrkte. 22% of respondents say their firms are exploring digital technologies while 7% say their firms are close to making the final decision. He leads the Private Market team in shaping the strategic direction of the program, plays an active role in sourcing, monitoring of investments and serves on various underlying partnership advisory boards.s. Principles for Responsible Investment, annual report, 2022. While the long-term demand for capital is tremendous, with a projected global infrastructure spending gap of $15 trillion through 2030,2McKinsey. OPAQUE ENTRY VALUATIONS Sustainability-related deals (the E) increased by 7 percent to nearly $200 billion, proving resistant to the deal-making headwinds that affected other asset classes. Tighter financial conditions and general risk aversion continued to slow activity across the venture capital industry in the fourth quarter of 2022. Indeed, real estate performance has exceeded inflation in six of the last seven inflationary periods, in part due to cap rate compression even during a rising interest rate environment. But whether the exit activity will be on par with that of 2021 remains to be seen, and may hinge on looming economic risks. However, top-performing Asian private equity funds show historical performance that often exceeds top-performing North American and European funds.2 This outperformance has generally been delivered with lower levels of underlying leverage, as company-level debt is less readily available and/or less attractively priced in Asia versus Western markets, and private equity subscription lines of credit are less commonly used by funds in Asia.3 General partners (GPs) in the region that are able to identify the right market opportunities and execute accordingly have shown that they can indeed deliver that much desired risk premium. For illustrative purposes only.[8]. SCARCITY VALUE DRIVES SIGNIFICANT EXIT PREMIUMS Amid current financial market volatility, investors are revisiting asset allocations in their portfolios, hoping to identify attractive market segments with upside potential. The 2022 Preqin Global Alternatives Reports are the most complete and in-depth annual reviews of private equity, venture capital, private . Macroeconomic headwinds, including rising inflation and interest rates, coupled with negative public market performance (17.7 percent) triggered the aforementioned denominator effect, and LPs scaled down new commitments. 5 Source: Statista, data as of June 2022. Credit Card Penetration defined as percentage of people 15+ who use credit cards. LPs want more transparency, data points around . Globally, private equity generated $512 billion in buyout deal value during the first half of 2022, putting it on pace to produce the second-highest annual total ever (behind 2021's all-time record). Report is also available in Chinese, Japanese and Korean upon download. For those that can identify and partner with such private equity managers, there exists a promising opportunity for outperformance in the region. FMIL is regulated by the Central Bank of Ireland and is incorporated in Ireland as a private company limited by shares with company registration number 616661 and has its registered address at The Observatory, 7-11 Sir John Rogersons Quay, Dublin 2, D02 VC42, Ireland. Aforementioned challengesthe higher cost and lower availability of debt, rapidly declining public market valuations, and macroeconomic uncertaintystifled growth, activity, and performance in what had been the best-performing private markets asset class for many years running. And multifamily and industrialsectors benefiting from changes in living and shopping behaviorsoftened after rapidly rising rents and occupancy of the past two years boosted performance (Exhibit 6). PDF Preqin Global Private Equity Venture Capital Report In the context of elevated investment levels, this likely suggests that investors are growing wary of risks such as inflation, rising interest rates and high valuations that could put the brakes on this unprecedented pace of transactions.[2]. The five-year horizon internal rate of return (IRR) of 19.2% trails global private equity (20.8%), but the one-year return of 24.8% is some way above the 14.4% for private equity globally. APAC investors are the most enthusiastic at 91%. It has been a positive year for ESG with a broad recognition of ESGs importance from all stakeholders and acknowledgement of its role in value creation. 6 Source: PPRO Asia Pacific, Western and Central Europe, North America Payments and e-commerce report 2022. McKinseys Private Markets Annual Review: 2017 to 2022. equity, real assets, and debt capital markets. Conversely, only 18% of North American respondents see it as a hindrance, the smallest percentage across all regions. Many attributes of businesses located in Asia are well-suited to operational improvements that can both further growth and increase margins. AUM ascended higher, as it has in every year since the global financial crisis, to $7.6 trillion. [9] PE Pulse: Five takeaways from 4Q 2021. A United Nations-supported network of investors promoting sustainable investment. 12 Weforum.org How reform has made Chinas state-owned enterprises stronger October 2020. In particular, megafunds gained prominence: 11 funds of more than $10 billion each were raised, totaling $170 billion collectively (Exhibit 4). Expanding capitalization (cap) rates across sectors, which represent the multiple investors are willing to pay for net operating income (NOI), drove performance lower. Both sectors attractiveness has increased from last year (30% and 26% respectively). Get the long story short in the latest episode of our Dry Powder podcast. Private market valuation refers to round size, as determined by capital invested divided by no of deals. Deal volumes declined 27 percent as financing became more expensive and harder to access. This article is a summary of a larger report, available as a PDF, that is a collaborative effort by Pontus Averstad, Alejandro Beltrn, Marcel Brinkman, Paul Maia, Gary Pinshaw, David Quigley, Aditya Sanghvi, John Spivey, and Brian Vickery, representing views from McKinseys Private Equity & Principal Investors Practice. Calvert Research and Management, ARBN 635 157 434 is regulated by the U.S. Securities and Exchange Commission under U.S. laws which differ from Australian laws. The adoption of technology within China over the past two decades is a good example. Alle Morgan Stanley Investment Funds anzeigen, View All 1GT: Climate Investing Reinvented. The median VC and growth funds lost 6.3 and 7.3 percent, respectively, through the first three quarters of 2022, while the median buyout fund earned 0.9 percent. Although PE firms have been slow to join the digital technology revolution, many are catching up and implementing advanced data and analytics tools to identify new growth opportunities and remain competitive. By contrast, Asia-Pacific (APAC) respondents maintain the most cautious view. Alternative investment funds are often unregulated, are not subject to the same regulatory requirements as mutual funds, and are not required to provide periodic pricing or valuation information to investors. 410 (Director of Kanto Local Finance Bureau (Financial Instruments Firms)), Membership: the Japan Securities Dealers Association, The Investment Trusts Association, Japan, the Japan Investment Advisers Association and the Type II Financial Instruments Firms Association. Investor strategy is backed by robust numbers: in 2021, IT accounted for nearly half of total deals completed (46%) and a third of total deal value (37%). AUM grew as well, reaching a new high of $1.3 trillion, 14.2 percent higher than in 2021. Shifting Gears: Private Equity Report Midyear 2022 - Bain This material is only intended for and will only be distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations. In the private markets, first-half deal activity softened but subtly so, nearly matching the record-setting pace set in 2021. Just 2,141 funds were closed during the year, 1,600 fewer than in 2021 and the fewest of any year since 2013. The pattern in 2021 and 2022 was no different: despite rising US Treasury (UST) rates, cap rates decreased and values rose. And while infrastructure and NR fund performance declined somewhat from 2021, these funds were the top-performing private markets asset classes in 2022. Please read and agree to the Privacy Policy. 2022 is likely to be an active year for private equity exits, and many investors are preparing to divest their portfolio companies. Retrieved from: https://pages.marketintelligence.spglobal.com/2021-Year-in-Review-Investment-Banking-Infographic.htm. EY. Direct lending fundraising declined from 2021, but only marginally, raising over $100 billion for the second consecutive year. While Asian private equity can be a difficult segment to diligence and access, MSIM believes that its 20+ year history investing in private equity funds and opportunistic investments in Asia, combined with the broader resources of Morgan Stanley, can help bridge this knowledge gap.1 MSIMs upcoming series on Why Invest in Asia Private Equity? will look to demystify the opportunity, starting out with The Case for Outperformance, which explores some of the drivers of outperformance including accelerated growth/leapfrog potential, valuation arbitrage, and the opportunity for company-level professionalization and efficiency improvement. 1 Subject to third party confidentiality obligations and internal policies and procedures established by Morgan Stanley, including information barriers and allocation policies, to manage potential and actual conflicts of interest and/or in respect of regulatory requirements. In closed-end funds, AUM reached a new peak, as it has every year since 2016, and managers raised the second-highest total on record, led by commitments to opportunistic vehicles. After more than doubling year over year in 2021, multifamily deal volume fell 29 percent in 2022, accounting for nearly half of the asset classs overall decline in deal activity. OPERATING EFFICIENCY AN OVERLOOKED RETURN DRIVER Though few LPs thus far have abandoned commitment plans entirely or sold portfolios as they did 15 years ago, many have pulled back, particularly from smaller and newer funds, causing fundraising to decline. Alternative investments typically have higher fees and expenses than other investment vehicles, and such fees and expenses will lower returns achieved by investors. Additionally, the deal-making momentum of 2021 continued through the first half of the year before falling dramatically in the second, weighed down by reduced credit availability and valuation uncertainty. However, the overall number of firms not considering ESG factors when looking for new investments remained unchanged from last year at approximately 20%. In Switzerland, MSIM materials are issued by Morgan Stanley & Co. International plc, London (Zurich Branch) Authorised and regulated by the Eidgenssische Finanzmarktaufsicht (FINMA). Survey of private equity (PE) and venture capital (VC) firms 2022 Among this cohort, 46% of Chinese unicorns reached that status within two yearsversus only 9% of U.S. unicorns, suggesting this hyper-accelerated growth as the norm rather than the exception among successful Chinese startups.4. For more from Dry Powder on the report, you can listen to Three Essential Trends. Automating these manual, inefficient processes are potential easy-wins to improve efficiency. Example: 70% of all Europe-based investors responded that they are planning of making investments in Software & Services. More than 40% of both European and North American investors are concerned about the availability of key skills and talent, the highest number across all regions. Its our market overview from Bain & Companys 2022 Global Private Equity Report. 314182, which accept responsibility for its contents. Concerns over start-ups' high burn rate and limited exit options caused by a global equity sell-off have extended funds' holding periods and slowed capital distribution. In total we received 357 responses from PE and VC investors globally. As the industry narrative turned from beta to alpha, there was less alpha to be had in 2022. After a frenzied 2021, private equity (PE) deal volume decreased 26 percent to $2.4 trillion, while deal count fell 15 percent to just under 60,000. 2 Preqin, data as of September 2022. Amid a pullback in commitments, an outsized share of capital flowed to the largest funds, as investors re-upped with their existing managers but reduced backing smaller and new funds. TECH AS A LEAPFROG OPPORTUNITY The complexity and idiosyncrasies of Asian markets usually result in greater opacity to valuations. Notably, 40% of respondents from North America and 26% from Europe claim that they dont face any major challenges, while only 11% of LatAm investors and 13% of Middle East investors feel the same. Quantitative tightening and dislocation in asset prices raised fears of an economic slowdown. Geopolitical risks, currency risks, and exits/liquidity are important considerations for investors contemplating an allocation to Asian private equity, and adequately addressing these risks are undoubtedly key to achieving positive performance in Asian markets. On average, 56% of respondents believe deal activity will improve in the next 12 months. /pub/content/dam/im/json/imwebdata/im/data/misc/translation/translation.json, /pub/content/dam/im/json/imwebdata/im/data/misc/translation/aggTranslation.json. Add-on deals, which tend to be smaller, continued to gain share as a percentage of total deals. Registered Office: 25 Cabot Square, Canary Wharf, London E14 4QA. The 2022 Global Private Equity Report: Market Overview 00:00 08:58 Today on Dry Powder, we'll cover the essential indicators of 2021, which can inform your strategy in 2022 and beyond. In Indonesia, for example, stakeholders including entrepreneurs, venture capital (VC) funds and politicians, are working in concert to pre-empt potential fintech-related regulatory issues observed in the U.S. and China, such as crackdowns in the peer-to-peer lending space. Under-penetration of financial services and modern retail presented an opportunity for China to develop more advanced solutions than what existed in the West. Counterintuitively, manager selection mattered less in 2022 than in years past: the interquartile spread of returns of PE funds narrowed in 2022 to 21.6 percent from the prior ten-year average of 33.8 percent. This has played out among Korean tech companies where early-stage investments are limited to local VCs, keeping valuations modest. Australia: This material is disseminated in Australia by Morgan Stanley Investment Management (Australia) Pty Limited ACN: 122040037, AFSL No. Eine zeitgerechte Analyse markt-verndernder Ereignisse und deren Wirkung auf das Anlageumfeld. 1981121. This can lead to less friction as industries grow. In a break from years past, PE performed worse than other private asset classes, producing negative returns (through September 30, 2022) for the first time since 2008. Federal and state tax laws are complex and constantly changing. This year we also included a question on investors advances on their digitization and automation journey. Source: AVCJ Research, as of 31 December 2022. This material has been issued by any one or more of the following entities: EMEA: This material is for Professional Clients/Accredited Investors only. How market turmoil is filtering the waters of private real estate In the early 2000s, Chinas tech industry followed a copycat model, with consumers adopting technology that had proven successful in the U.S. Morgan Stanley Investment Management (MSIM) views private equity in Asia as a potential bright spot for investors that offers the opportunity for outperformance, particularly at the current juncture. Labor shortages in the wake of the pandemic are undoubtedly playing a role in the overall picture. Information regarding expected market returns and market outlooks is based on the research, analysis, and opinions of the investment team of the Private Markets Solutions Team. Across the entire investment life cycle, from fundraising and asset selection to value creation and exit planning, ESG is on the minds of investors (Exhibit 11). Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. Mobile solutions such as real-time online loans to the unbanked, leveraging digital information, cross-border transfers at lower friction/cost, etc., are all helping to boost financial inclusion in Southeast Asia. Vintage years beyond 2017 have been excluded as performance is less mature and may be too early to tell. Changes is slowest in the Middle East and Africa where 18% of investors have yet to embark on digital revolution at all. 9 Source: AVCJ, data as of September 30, 2022. The growth rate was lower Global alternatives AUM forecast to double by 2026, topping $23 Retrieved from: https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/article?id=66494139. Source: S&P Global Market Intelligence. First-time fund launches also decreased by 40 percent. New government policies that provide incentives for certain ESG investmentsmost notably the US Inflation Reduction Act of 2022are likely to strengthen this correlation further. Today on Dry Powder, well cover the essential indicators of 2021, which can inform your strategy in 2022 and beyond. After making an investment, GPs have five value creation levers they can pull to improve their portfolio: Pontus Averstad is a senior partner in McKinseys Stockholm office; Alejandro Beltrn is a senior partner in the Madrid office;Marcel Brinkman is a partner in the London office; Paul Maia is a partner in the New Jersey office; Gary Pinshaw is a senior partner in the Sydney office; David Quigley is a senior partner in the New York office, where Aditya Sanghvi is a senior partner; andJohn Spivey is an associate partner in the Boston office, where Brian Vickery is a partner. Datenschutz Funds over $5 billion collected a record $445 billion in aggregate, a 51 percent increase over funds of a similar size in 2021. Despite these challenges, 2022 is likely to be the second-best fundraising year on record (after all data is reported), demonstratingthus fardiscipline and longer-term thinking by LPs. [12] Robust private equity exits may set record year. Beneath these headline statistics, revolutions in energy, mobility, and digitization are changing the face of infrastructure investing. 44% of respondents indicated they are planning to focus on improving ESG related factors in their portfolio companies this year, and 32% are seeking investments with a good ESG track record, up from 29% in 2021. The flow of capital into the asset class has pushed investors to look beyond traditional core infrastructure assets (Exhibit 10). No investment should be made without proper consideration of the risks and advice from your tax, accounting, legal or other advisors as you deem appropriate. *I have read thePrivacy Policyand agree to its terms. 2021 was an exceptional year for exits: not only did the number of exits increase by 34% from 2020, but exit value also increased by 57%. Private debt fundraising continued to grow last year (+2 percent), once again bucking the trend of other private asset classes. Each year since its inception, this annual publication has discussed new records in fundraising and deal flow while celebrating strong performance across asset classes. 2022 Preqin Global Private Equity Report. One of real estates biggest draws for institutional investors is the long-held belief in the asset classs ability to protect real value during periods of higher inflation. Leapfrog tech potentially has the ability to further accelerate growth, thereby offering the opportunity for outsized returns. Venture capital is gearing up for a cold spell as portfolio companies' growth and fundraising are slowing. Disallowed Products Our Products Preqin Pro Alternative assets data platform Insights+ This is up from 51% in 2021, indicating that its attractiveness continues to grow year-on-year. Private markets deal volume plummeted, performance declined, and valuations felldramatically in certain sectors. But ESGs growing impact on private markets goes beyond just dedicated funds and deals: most funds (of any strategy) now consider ESG risk factors in due diligence, and some explicitly include ESG concepts in their value creation plans. The table below indicates the fund types Preqin considers as constituting each asset class. Increasing representation across all levels will require managers to take fresh approaches to hiring, retention, and promotion. Markets climbed higher still, awash with central-bank-induced liquidity. Going into 2022, PE/VC investors are mainly concerned about the changes to the economic environment. Going into 2022, PE investors remain largely bullish on the investment activity outlook. Insights Blog: Five Findings from COP27 with Vikram Raju. More than three-quarters of firms (77%) say they are planning to exit their portfolio companies, marking an increase from last year (66%). Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. NOT FDIC INSURED | OFFER NO BANK GUARANTEE | MAY LOSE VALUE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY | NOT A DEPOSIT. Download the Complimentary Report. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," continue" or "believe" or the negatives thereof or other variations thereon or other comparable terminology. That number is likely to have grown even higher in the second half of 2022, as deal flow dried up more abruptly than fundraising slowed. Core-plus and value-add strategies are now investing in new asset categories and infrastructure service providers as GPs seek to accommodate the return expectations of a new class of infrastructure investor. Trial by fire: Indian PE ecosystem resilient in a globally challenging year. VC and growth equity both had their second-largest fundraising year on record, cumulatively accounting for more than 50 percent of PE fundraising for the first time. Number of France-based institutions investing in private equity grows In our podcast series, Bain's Hugh MacArthur interviews leading experts on the trends and opportunities that will redefine the private equity industry. Most of the current fund commitment decisions were made last year, which was impacted by the denominator effect as public markets . Registered Office: Beethovenstrasse 33, 8002 Zurich, Switzerland. Fundraising hit a new record in 2021 with established fund managers riding the wave. Number of France-based institutions investing in private equity grows Only 13% of respondents anticipate fundraising conditions to deteriorate. Signs of a flight to quality, or at least to better-known managers, emerged. Note: Credit Card Penetration as defined by percentage of people age 15+ who use credit cards Source: Statista, data as of June 2022, Source: PPRO Asia Pacific, Western and Central Europe, North America Payments and e-commerce report 2022. The definition of infrastructure and natural resources continues to expand, with todays funds now taking more equity risk than yesteryears did. 37% think it will remain the same, a slight increase over 2021 when only 27% of investors expected deal activity to remain flat. Sponsored by. MSIM will look to address these risks/opportunities in future briefs. Compared with a heady prior decade of robust growth, 2022 was a subdued year in the private markets. It's our market overview from Bain & Company's 2022 Global Private Equity Report. By Cameron Joyce, CFA and Michael Patterson. Following the record highs achieved in 2021, which were buoyed by pent-up demand from the earlier stages of the pandemic, several exogenous macroeconomic events stymied growth. [1]The study centered mostly on General Partners (GP) expectations around deal-making, fundraising, investment strategy, threats to the growth of portfolio companies, and the approach to Environmental, Social and Governance (ESG) factors. PDF Private Equity Market Update - CAIA From 2021 to 2022, total PE fundraising activity dropped around $100 billion with the top 10 closed funds representing nearly a third of total funds raised, according to PitchBook's 2022 Annual Global Private Market Fundraising report.