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Laxman Pai, Opalesque Asia: Macroeconomic headwinds are buffeting private equity (PE), venture capital (VC), and real estate in the near term, but opportunities are still emerging across the alternative asset classes, said a study.
According to Preqin Global Report 2023: Alternative Assets, for PE and VC, the stimulus-fueled market frenzy of 2021 has died down, leading valuations, fundraising, and deal activity to fall heavily in 2022.
PE performance is likely to be impacted by higher interest rates, which will directly affect the performance of leveraged buyouts. VC will experience pressure on returns in the short term, with lower valuations making it more difficult to exit investments profitably, but opportunities still exist to deploy the half-trillion dollars of available dry powder.
Preqin expects annualized global PE returns to fall to 13.5% between 2021 and 2027, compared with the 15.4% per year achieved in the 2015 to 2021 period.
2023 may be a turning point, as valuations have declined and competition for deals has eased, creating more opportunities for VC managers to deploy their dry powder in search of attractively priced, promising targets. Preqin forecasts that the amount of dry powder will increase to $659.1bn by the end of 2027, up from $530.8bn as of September 2022.
"While we anticipate AUM growth for private debt to moderate somewhat, it's still expected to outpace alternatives generally, particularly PE and real estate in the coming y...................... To view our full article Click here
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