2022 preqin global private equity venture capital report

/marketintelligence/en/news-insights/research/2022-global-private-equity-outlook Global Private Equity Report 2023 | Bain & Company However, in 2021, the Consumer sector saw the sharpest rise in deal value of all sectors, tripling $180.8billion in 2021 from $63.3billion in 2020 to[7]. 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). Geographically, 45% of respondents were from Europe, 19% were from North America, 15% were from APAC, 8% were from the Middle East & Africa and 13% were from Latin America. Finally, macroeconomic forces, including higher energy prices and geopolitical conflict, have strengthened long-term investor interest in alternative energy sources and overall energy independence. Anne Philpott, Churchill Asset Management Amid current financial market volatility, investors are revisiting asset allocations in their portfolios, hoping to identify attractive market segments with upside potential. Beneath these headline statistics, revolutions in energy, mobility, and digitization are changing the face of infrastructure investing. 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. For those who are not professional investors, this document is provided in relation to Morgan Stanley Investment Management (Japan) Co., Ltd. ("MSIMJ")s business with respect to discretionary investment management agreements ("IMA") and investment advisory agreements ("IAA This is not for the purpose of a recommendation or solicitation of transactions or offers any particular financial instruments. Consideration of ESG is not limited to fundraising and deal activity. 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. Total private markets assets under management (AUM) reached $11.7 trillion as of June 30, 2022. Going into 2022, PE investors remain largely bullish on the investment activity outlook. 2021 was a record year for the PE industry as investment activity surpassed the trillion-dollar mark for the first time. McKinsey Global Private Markets Review 2023 | McKinsey equity, real assets, and debt capital markets. Private debt fundraising continued to grow last year (+2 percent), once again bucking the trend of other private asset classes. 13 Russell Reynolds, Transitioning to the Next Generation: Leadership succession within family businesses in Southeast Asia, November 2021. Another prevailing theme for the upcoming months to grow in significance will be digitalization. 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). 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]. 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. 18% of APAC investors say that LPs demanding diversification and fierce competition against larger firms pose other significant fundraising challenges. PDF PREQIN GLOBAL - bebeez.it [13]In terms of exit methods, trade sale will still be the most preferable route, attracting a third of respondents (32%) versus a quarter last year. 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 . These disruptions had substantial and varied impacts on private markets fundraising, performance, and AUM growth, with steep declines in certain regions and strategies, and pockets of resilience in others. [11] S&P Capital IQ Pro Platform (as of 25/01/2022). Beyond China (which is currently facing its own challenges), leapfrog potential exists in other parts of Asia. France: MSIM FMIL (Paris Branch), 61 rue de Monceau 75008 Paris, France. 2022 is likely to be an active year for private equity exits, and many investors are preparing to divest their portfolio companies. 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. Exits in the region are notoriously complicated, as tighter public markets limit IPO options and geopolitical uncertainty clouds valuations. For example, recent McKinsey research found that publicly traded ESG outperformers that also outperformed peers on margin and growth delivered 200 basis points in excess return to their shareholders over companies that only outperformed financially.6McKinsey research to be published. Deal volumes declined 27 percent as financing became more expensive and harder to access. 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. AUM has now grown at an annual rate of nearly 20 percent since 2017. The research defines outperformers as companies whose score on a series of assessed ESG metrics improved over time. Bain's Nirad Jain and Kara Murphy share insights from our annual report. Almost 17% of PE professionals from that region anticipate the investment landscape will deteriorate in 2022. 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. 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. New platforms comprised 28 percent of total transactions in 2022, 14 percentage points lower than five years ago. Survey of private equity (PE) and venture capital (VC) firms 2022 Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Beyond robust GDP growth, under-penetration in many sectors creates opportunity for accelerated growth. For some strategies, a contingency fee may be incurred in addition to the fee mentioned above. Number of France-based institutions investing in private equity grows 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. Get the long story short in the latest episode of our Dry Powder podcast. Please read and agree to the Privacy Policy. Download the Complimentary Report. Key Takeaways Retrieved from: https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/article?KeyProductLinkType=2&id=67618330, [13] PE-backed SPACs in 2021 soar past last year's tally. But whether the exit activity will be on par with that of 2021 remains to be seen, and may hinge on looming economic risks. Spain: MSIM FMIL (Madrid Branch), Calle Serrano 55, 28006, Madrid, Spain. Contenders for the third sector of choice are the Consumer (35%) and Industrials (34%) sectors. OPERATING EFFICIENCY AN OVERLOOKED RETURN DRIVER According to Preqin data,[3]aggregate capitalraised by growth funds hit a new record of $136 billion, up by 60% on the previous year and exceeding the 5-year average of $114 billion. Overall, 41% of respondents say that their firms are in the early implementation stage, mainly focusing on using Customer Relationship Management (CRM) and digital platforms for reporting. 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. AUM ascended higher, as it has in every year since the global financial crisis, to $7.6 trillion. *I have read thePrivacy Policyand agree to its terms. Stay on top of today's volatile markets with these timely resources. Bain's Global Private Equity Report examines the industrys strengths, its challenges, and the evolutionary path that lies ahead. This is up from 51% in 2021, indicating that its attractiveness continues to grow year-on-year. 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. 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. 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. NR outperformed all others, returning 15.6 percent in a second consecutive year of strong performance driven by rising commodity prices. ASIAN BUSINESSES RIPE FOR PROFESSIONALIZATION Eine zeitgerechte Analyse markt-verndernder Ereignisse und deren Wirkung auf das Anlageumfeld. Private Equity, Venture Capital & Private Debt in Focus - Preqin 20% of all survey participants think that large LPs pouring capital into fewer funds with established LP-GP relationships is the second most common challenge, a sentiment felt most by European investors (23%). In particular, megafunds gained prominence: 11 funds of more than $10 billion each were raised, totaling $170 billion collectively (Exhibit 4). PDF 2016 Preqin Global Private Equity & Venture Capital Report Going into 2022, PE/VC investors are mainly concerned about the changes to the economic environment. First-time fund launches also decreased by 40 percent. Funds over $5 billion collected a record $445 billion in aggregate, a 51 percent increase over funds of a similar size in 2021. In terms of advanced digitization, 14% declare their organizations have advanced to the point of leveraging data science for automated deal sourcing and due diligence, while only 7% of respondents said that digital technologies have been fully implemented into their playbook. Paired with lower valuations public market valuations trading as much as 40-50% lower than the US on a P/E basis,8 and private markets valuations that have almost halved from their peak9 there should be a particularly attractive opportunity at hand. Fundraising results differed notably across geographies, more so than in previous years. 2022 will prove to be the best year yet for ESG-focused fundraising, with $24 billion raised through the first half of the year. Yet, like most private market segments, real estate experienced a downturn in 2022 compared with the record year it followed. 2022 Preqin Global Private Equity Report | Preqin 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. Global private markets fundraising declined by 11 percent to $1.2 trillion. Source: Preqin Pro as of September 30, 2022, COPYCAT MODELS ACCELERATING GROWTH AUM grew as well, reaching a new high of $1.3 trillion, 14.2 percent higher than in 2021. Each region benefited from an investment spree, with Latin America (LatAm) and North America (NA) witnessing the highest uptick in aggregate deal value year-on-year. More private markets managers are incorporating considerations for ESG factors into their corporate policies, operating procedures, and investment decisions. The 2022 Preqin Global Alternatives Reports are the most complete and in-depth annual reviews of private equity, venture capital, private . In total we received 357 responses from PE and VC investors globally. The research defines outperformers as companies whose score on a series of assessed ESG metrics improved over time. Beyond localized operations, the ability to adapt to unique customs can be both a hurdle and opportunity. Federal and state tax laws are complex and constantly changing. In addition to the copycat model, Asian markets have demonstrated a leapfrog phenomenonwhereby one region replicates and rapidly improves upon an innovation witnessed elsewhere. Increasing representation across all levels will require managers to take fresh approaches to hiring, retention, and promotion. Infrastructure and natural resources grow and evolve, Private markets advance their ESG agendas. In Europe, an 11-year run of fundraising growth ended, largely due to geopolitical instability and broader macroeconomic challenges, including volatility in foreign currency exchange rates. However, many are cautious of the growing inflation and rate hikes that may impede the unprecedented rate of investment activity. In China, state-owned enterprises make up approximately 40% of GDP.12 These companies have traditionally been less nimble and commercially focused than their private counterparts, with many straightforward areas for operational improvement. 2022 will prove to be the best year yet for ESG-focused fundraising, with $24 billion raised through the first half of the year. Private equity funds continued to deliver returns outpacing any other asset class. Registered Office: 25 Cabot Square, Canary Wharf, London E14 4QA. Retrieved from: https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/article?id=66494139. Andrew Slimmon, Lead Portfolio Manager der Fonds und Strategien des Applied Equity Advisors Teams, teilt seine Einschtzung der Finanzmrkte. 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. 2 Preqin, data as of September 2022. (As of 16/11/2021). After more than a decade of rapid fundraising growth, strong macroeconomic headwinds slowedbut did not stopprivate debts growth. 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. The continued momentum in 2022 was understandable, as debts current yield and senior position in the capital stack have long made it a haven in volatile periods. Most of the current fund commitment decisions were made last year, which was impacted by the denominator effect as public markets . research Venture Capital Q2 2022 | Preqin On some diversity metrics, private markets firms compare favorably with corporate America, although ethnic diversity is not yet broad based. Expanding capitalization (cap) rates across sectors, which represent the multiple investors are willing to pay for net operating income (NOI), drove performance lower. For illustrative purposes only. This document is disseminated in Japan by MSIMJ, Registered No. Like PE deal making, first-half real estate deal making continued close to the record-setting pace of the second half of 2021, but second-half volumes declined precipitously. Concerns about the availability of skills and talent as a threat to the growth of portfolio companies have doubled from last year, climbing to 36% from only 17% in 2021. (As of 20/01/2022). Disallowed Products Our Products Preqin Pro Alternative assets data platform Insights+ Global alternatives AUM forecast to double by 2026, topping $23 Finally, amid the broader slowdown in technology-oriented PE deal making, investments in property technology companies fell to the lowest total in five years. MSIM will look to address these risks/opportunities in future briefs. The 2022 Global Private Equity Report: Market Overview - Bain The mood changed in early summer. Dry powder inventorythe amount of capital available to GPs expressed as a multiple of annual deploymentspiked. The economic effects of the pandemic continue to linger; however, as PE/VC firms have gained more experience with its impact, it has become less of a concern, dropping to second place this year (48%). MSIMJ exercises the delegated authorities based on investment decisions of MSIMJ, and the client shall not make individual instructions. Buyout deal value and exits set all-time records for the industry. At the same time, deal volume grew by 41.6% over 2020, proving that investors predictions of improved deal-making in 2021 came to fruition. This material has been issued by any one or more of the following entities: EMEA: This material is for Professional Clients/Accredited Investors only. Venture capital assets under management tripled between December 2016 and March 2021, from $574bn to $1.68tn. Private equity surged ahead with soaring deal and exit values. In the private markets, first-half deal activity softened but subtly so, nearly matching the record-setting pace set in 2021. 4 Source: BCG, Decoding the Chinese Internet Sept 2017 The definition of infrastructure and natural resources continues to expand, with todays funds now taking more equity risk than yesteryears did. Italy: MSIM FMIL (Milan Branch), (Sede Secondaria di Milano) Palazzo Serbelloni Corso Venezia, 16 20121 Milano, Italy. Retrieved from: https://www.spglobal.com/esg/insights/key-esg-trends-in-2022. Jim Caron, Co-Lead Global Portfolio Manager and Co-Chief Investment Officer of the Global Balanced Risk Control (GBaR) Team, shares his macro thematic views on key market drivers. Across all regions, digitalization is high up on PE agendas and awareness has risen significantly. [4]The most favored industry group within the sector across regions, according to our respondents, is by far Software & Services (61%), while only 17% plan to invest in Hardware. Retrieved from: https://www.ftadviser.com/investments/2021/10/07/investing-in-the-next-generation-of-healthcare-opportunities/, [6] M&A Year in Review 2021. The proportion of total private capital fundraising that came from managers with an investment policy that includes ESG issues rose to 66 percent in 2022,5Preqin. VC fundraising also saw an increased level of activity, with an aggregate capital raised up 23% on the previous year. The market environment in the next few years will present further dislocation and opportunity for fundamental value creation. [7] S&P Capital IQ Pro Platform (as of 27/01/2022). 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. As bank financing dried up in the second half of the year, private lenders stepped into the void, providing financing for more than 80 percent of PE transactions in the middle market. 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. [14] S&P Capital IQ Pro Platform (as of 14/02/2022). This trajectory led to faster adoption; based on data from 1997-2015, unicorn status Chinese Internet startups took an average of four years to reach their $1 billion valuationversus seven years for their U.S. counterparts. Private markets deal volume plummeted, performance declined, and valuations felldramatically in certain sectors. All clients should read the Documents Provided Prior to the Conclusion of a Contract carefully before executing an agreement. How market turmoil is filtering the waters of private real estate Indirect charges also may be incurred, such as brokerage commissions for incorporated securities. 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. High inflation persisted throughout most of 2022, prompting central banks around the world to increase interest rates at a historic pace. Report is also available in Chinese, Japanese and Korean upon download. The Netherlands: MSIM FMIL (Amsterdam Branch), Rembrandt Tower, 11th Floor Amstelplein 1 1096HA, Netherlands. This is prepared for sophisticated investors who are capable of understanding the risks associated with the investments described herein and may not be appropriate for the recipient. [9] PE Pulse: Five takeaways from 4Q 2021. For the fifth consecutive year, S&P Global Market Intelligence conducted an annual survey among PE and VC practitioners to measure industry outlooks for the upcoming 12 months. By just about any measure, private equity set a remarkable new standard in 2021. 37% think it will remain the same, a slight increase over 2021 when only 27% of investors expected deal activity to remain flat. Screening results include only M&A Exits not IPOs. a new high. Interest rates stayed low, credit availability was high, and valuations rose consistently. All forecasts are speculative, subject to change at any time and may not come to pass due to economic and market conditions. While there is generally broad appreciation for growth potential in Asia, there is often an implicit assumption that markets are efficient with commensurate valuations, or, said differently, that higher growth potential means higher valuations.7 That is not necessarily the case in Asia. Labor shortages in the wake of the pandemic are undoubtedly playing a role in the overall picture. A strengthening dollar accounted for a material portion of the dollar-based decline in fundraising in non-US markets. Planning to Commit More Capital to Private Equity Investors' Expected Capital Commitments to Alternative Assets in the Next 12 Months Compared to the Previous 12 Months 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Private EquityVenture Capital Private Debt Hedge Funds More Capital Same Amount of Capital Real EstateInfrastructure Less Capital Gbenga Oladeji oversees Global Private Markets for Johnson & Johnson Benefits Investment team. Valuation multiples have been falling across both public and private markets, with venture capital positions arguably the most . Investors flocked to the asset class because of its ability to provide stable cashflows, less correlated returns, and a hedge against inflation. 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. Stay ahead in a rapidly changing world. This is of particular concern for LatAm investors: 38% of respondents from the region say that convincing LPs about the right strategy and ability to deploy capital effectively is the biggest fundraising challenge their firm is facing. esgSubNav, Discover more about S&P Globals offerings, Global Credit and Risk Symposium: Unlocking Possibilities, https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/private-equity-managers-expect-another-boom-year-in-2022-68394243, https://www.ftadviser.com/investments/2021/10/07/investing-in-the-next-generation-of-healthcare-opportunities/, https://pages.marketintelligence.spglobal.com/2021-Year-in-Review-Investment-Banking-Infographic.htm, https://www.ey.com/en_us/private-equity/pulse, https://www.spglobal.com/esg/insights/key-esg-trends-in-2022, https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/article?KeyProductLinkType=2&id=67618330, https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/article?id=66494139, JW Marriott Sao Paulo Av. 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. 3 Preqin, data as of July 2022. 2022 Global Private Equity Outlook | S&P Global Market Intelligence (As of 7/10/2021). This has played out among Korean tech companies where early-stage investments are limited to local VCs, keeping valuations modest. Last year may go down as a pivotal year in the history of alternative assets. Further, there is a local-global arbitrage opportunityidentifying a company at a well-priced local market entry valuation, repositioning the company for global markets, and exiting at a premium valuation commensurate with a global company. 8 Source: Bloomberg, data as of February 28, 2023. Performance also declined from 2021s high as lower marks offset current yield gains. The flow of capital into the asset class has pushed investors to look beyond traditional core infrastructure assets (Exhibit 10). In the first half of 2022, central banks fought roaring inflation by sharply raising interest rates, and public market valuations cratered. Closed-end fundraising declined 23 percent year over year. For those that can identify and partner with such private equity managers, there exists a promising opportunity for outperformance in the region. Bookmark content that interests you and it will be saved here for you to read or share later. 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. Nutzungsbedingungen. Going into 2022, PE investors remain largely bullish on the investment activity outlook. As of the second quarter of 2022, dry powder exceeded $3 trillion, reflecting an 8.4 percent year-over-year increase and marking the eighth consecutive year of growth.
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