PitchBook, a Morningstar company specializing in private markets data, expects 33% growth in alternative asset volume over the next five years.
The growth of private markets has far outpaced the expansion of public markets during the decade ending in 2022. The industry snapshot puts wealth in alternative assets at $14.7 trillion. The question is, is there room for the volume of private funds to continue growing? pitchbook It says yes. “We expect global private capital to reach almost $20 trillion in 2028, with an increase of up to $24 trillion if the macroeconomic environment is favorable,” say its analysts Nathan Schwartz, Zane Carmean and Andrew Akers.
This is one of the main conclusions drawn from the report they have just published in which they forecast the evolution of private markets for the next five years. For each strategy, it offers three possible scenarios: a base case, an optimistic one, and a pessimistic one.
The main macroeconomic factor that influences the growth of the sector is the future evolution of interest rates. Within the Pitchbook model, the two variables that would have the greatest impact on each of the asset growth scenarios are: the profitability of the funds and fundraising (or fundraising), both of which depend on the macroeconomic climate and the recycling of funds. the distribution of maturing funds.
The heterogeneous nature of private markets means that different asset classes will be influenced by different factors and to different extents, so not all categories will have the same evolution. He private equitythe private debt and the real assets (only include infrastructure and natural resources) are supported by more favorable expectations. This is not the case, however, of venture capital and the real estate.
The report also values the positive contribution of the secondary to the growth of the industry. They are expected to experience an advance from $462.5 billion to more than $700 billion (base scenario). “Secondary fund managers are in a position to raise capital to provide the desired liquidity needed by legacy fund LPs, allowing for strong asset expansion,” the report notes.
The other side of the coin is for the funds of funds, who accumulate assets close to a billion dollars. However, Pitchbook anticipates practically zero growth in the strategy, mainly due to a decrease in fundraising.
The analysis includes a forecast for each of the scenarios at the strategy and sub-strategies level, with buyout funds, PE growth, infrastructure and direct loans being the ones that are likely to experience strong growth in the next five years.
