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Alternative assets industry set to grow the most in Asia Pacific over next five years

Monday, November 23, 2020
Opalesque Industry Update - The alternative assets industry is set for continued growth in every region over the next five years, despite the challenges posed by market uncertainty.

Preqin's Future of Alternatives 2025 AUM growth models find that APAC will be the fastest-growing region - Preqin forecasts a 25.2% CAGR for alternatives AUM between 2019 and 2025, reaching almost $5tn. Europe and North America will experience slower growth, but North America will maintain its position as the largest alternatives market, with AUM rising to $8.6tn over the next five years. Overall, it is emerging markets that are expected to come to the fore in the next five years: more than a third of investors surveyed see emerging markets as presenting the best opportunities in 2025.

Dave Lowery, Head of Research Insights, said: "Alternatives are expected to grow in all regions, but the biggest expansion will be seen in Asia Pacific. APAC's growth will be led by private equity and venture capital. In fact, venture capital in the region will boom as the internet economy is projected to triple in size from 2019 and hit $300bn in 2025.

"However, the industry will also turn increasingly to emerging markets, which are expected to grow at a faster rate than the global average. The Middle East is home to some of the world's largest investors, Africa has created opportunities for foreign investors with the opening of capital markets, and Latin America has already experienced an increase in private equity transactions."

Key Regional Growth Predictions:

• Preqin forecasts that Asia-Pacific's private market AUM will grow from $1.62tn in 2019 to $4.97tn in 2025, at a world-beating CAGR of 25.2%.
• North America-based AUM will increase from $6.6tn in 2019, to $8.6tn in 2025.
• Over the same period, Europe-based AUM will go from $2.17tn to $2.83tn.
• AUM outside of major regions (APAC, Europe, North America) will rise at CAGR of 11.1% to $428bn by 2025, a faster rate than the global estimate of 9.8%.
• Thirty-three percent of investors see emerging markets as presenting the best opportunities in 2025.
• Of special note, regulatory changes in the Middle East will make the market more attractive for fund managers.

Preqin has produced projections of AUM growth in each asset class, and for the industry as a whole. This model combines Preqin's unmatched data covering 20 years' of alternatives activity with macroeconomic trends to offer a detailed picture of the course of the industry's development over the next five years.

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