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Laxman Pai, Opalesque Asia: The total assets under management (AUM) of private capital funds focused on North America stood at $5.56tn (excluding funds of funds and secondaries) at the end of December 2021, said a study.
According to the Preqin study, to put this into perspective, in December 2008 the industry's AUM was around $1.41tn. "US private capital has grown nearly 300% since 2008, but higher interest rates and lower risk appetite have hit valuations hard," it said.
The report, Alternatives in North America 2022, pointed out that the knock-on effects of inflation and risk aversion from the ongoing military conflict in Ukraine fed through to private equity markets in Q2. Although fundraising in the first half of 2022 looks solid, Preqin analysts expect a decline in activity in the second half.
With a weaker exit environment and lower valuations, hold periods are likely to extend, leading to reduced distributions. This could have a knock-on effect on fundraising.
North America-based private equity reached an all-time high AUM of $2.7tn in December 2021, on the back of year-on-year growth of 23%, itself the highest in a decade. The environment changed dramatically in 2022 and global public equity indices declined substantially in the first half of the year.
Venture capital (VC) looks among the most at-risk in the short term. Those funds which deployed capital during 2020 and 2021 are likely to see valuations fall significantly. But those wit...................... To view our full article Click here
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