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Alternative Market Briefing

PE/VC industry hits new record as its AUM reaches $4.74tn in 2020

Wednesday, February 10, 2021

Laxman Pai, Opalesque Asia:

Global private equity and venture capital AUM increased last year, up 6.1% to $4.74tn, said a new report by Preqin.

"The growth rate of the asset class was lower than the 9.9% average of the past decade, but we believe this slowdown will be temporary, with growth accelerating toward our forecast of $9.11tn in 2025," Preqin said.

Private equity also continues to outperform benchmarks, with buyouts returning median net IRRs of 14-17% for vintages 2010-2015, 13% for 2016, and 12% for 2017.

Venture capital is the best performing primary strategy for the 10th consecutive year, with 2017 vintage funds showing a median net IRR of 18%.

Fundraising, although down 14% from last year, surpassed $600bn for the industry.

Venture capital had a record-breaking year for both new investments and exits. In 2020, venture capital deal and exit value soared to $ and $365bn, respectively. It surpassed 2018's high of $289bn and the end-of-year exit value of $365bn was more than double the previous record of $179bn.

Private equity's expansion is set to accelerate, with investors expecting to increase commitments in 2021, the report said.

Private equity fundraising reached $611bn with 1,418 funds closed in 2020. This is down from 2019 when 1,886 funds were closed securing an aggregate of $709.3bn.

Investors are sticking with the program: 89% plan to maintain or increase commitments in 2021 and 51% expect the asset class to perform bett......................

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