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Laxman Pai, Opalesque Asia:

Private equity assets under management (AUM) may be poised to grow 28% to $5.8 trillion by the end of 2025 (vs. $4.5tn at year-end 2019), according to a report by the Deloitte Center for Financial Services.

"To estimate PE asset growth, we built a model that forecasts AUM growth under three different scenarios: baseline, bear, and bull. The baseline scenario, which has a 55% likelihood of occurring, assumes that US GDP grows by an average of 2.9% annually from 2020 to 2025" the report said.

It estimates that global PE AUM may reach US$5.8 trillion by the end of 2025. These results indicate a 28% jump in AUM over 2019, despite staying steady for the initial two years of the forecast.

"In our bear case, which assumes 1.5% average GDP growth, AUM is expected to grow to US$5.3 trillion. But if GDP growth averages 3.4%, our model predicts that assets grow to US$6.0 trillion in 2025, denoting the bull case. Fueled by economic uncertainty, all of these forecasts reveal the opportunities PE funds have to grow AUM; the amount of growth will likely depend on investment returns and investor behavior," it said.

Despite an optimistic forecast, it does not guarantee success for all PE firms. Firms that exceed the expectations of three key stakeholders-their employees, portfolio companies, and limited partners (LPs)-will likely benefit the most. The paper forecasts PE AUM growth and explores how PE firms can deliver on each......................

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