Global Alternatives Markets On Course to Exceed $30tn by 2030 — Preqin forecasts

 

Private equity is predicted to remain the largest private capital asset class, with Preqin forecasting it is on course to more than double in AUM from 2023-end to 2029, from $5.8tn to $12.0tn, at an annualized growth rate of 12.8%. Notably, Preqin analysts believe the asset class should represent approximately 6.0% of public and private equity markets by the end of 2024. This percentage is expected to increase over time, owing to a combination of factors, including private companies staying private for longer, take-privates, lackluster IPO markets, and an overall decline in the number of listed companies over time. Fundraising is expected to remain challenging, but growth is forecast to pick up from 2027, supported by increasing interest from private wealth investors who currently have a relatively low exposure to private equity. However, performance over the forecast period is expected to be softer than it has been, with global private equity projected to have a lower internal rate of return (IRR) compared with 2017–2023, falling to 13.4% from 15.5%.

 

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Meanwhile, private debt’s performance is forecast to improve, as led by distressed debt. Preqin believes the 2017–2023 average IRR of 8.1% should rise to 12.0% in 2023–2029F for private debt overall, with distressed debt to average 13.4% for the period. However, the difference in performance between private debt overall and distressed debt is expected to narrow, as the global economy moves towards a relatively more settled credit environment. Overall, private debt AUM is forecast to rise from $1.5tn at 2023-end to $2.6tn by 2029.

 

Additional key findings include: 

 

Venture capital: Artificial intelligence is expected to be one of the factors buoying early-stage venture capital with annualized AUM growth at 13.2%, followed by venture (general) at 11.1%, from end-2023 to 2029F. Late stage venture capital (8.1% annualized AUM growth) is forecast to be weighed down by the challenging exit environment and asset valuations, as well as greater regulatory scrutiny of mergers and acquisitions.

 

Real Estate: Global private real estate AUM is forecast to continue its steady growth to $2.7tn by 2029, following 2023’s dip ($1.6tn). Preqin’s models project that value-added will see the largest IRR increase of any real estate strategy for the forecast period compared with 2020–2023, increasing by 2.1ppts to 9.6%.

 

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