In closed-end funds, AUM reached a new peak, as it has every year since 2016, and managers raised the second-highest total on record, led by commitments to opportunistic vehicles. In total, 24,520 deals were closed, with an aggregate deal value worth $1.04 trillion, nearly double the amount from the year before. But whether the exit activity will be on par with that of 2021 remains to be seen, and may hinge on looming economic risks. And it's no wonder why, with its record performance in 2021. (As of 09/09/2021). Fundraising results differed notably across geographies, more so than in previous years. When it comes to the fundraising outlook, half of the respondents expect fundraising conditions to remain the same and another 36% believe it will improve; among Middle East and Africa investors the percentage is as high as 52%, which indicates a very positive outlook for 2022. However, cap rates started expanding toward the end of 2022, signaling heightened uncertainty across real estate markets. MSIM will look to address these risks/opportunities in future briefs. Another prevailing theme for the upcoming months to grow in significance will be digitalization. In Asia overall, family businesses and small and medium enterprises make up 85- 90% of companies.13 Many of these businesses operate at low margins due to limited implementation of systems and technology. Retrieved from: https://www.ey.com/en_us/private-equity/pulse, [10] Key Trends that will drive the ESG agenda in 2022. Registered in England. Yet, like most private market segments, real estate experienced a downturn in 2022 compared with the record year it followed. Funds over $5 billion collected a record $445 billion in aggregate, a 51 percent increase over funds of a similar size in 2021. This has played out among Korean tech companies where early-stage investments are limited to local VCs, keeping valuations modest. Interest rates stayed low, credit availability was high, and valuations rose consistently. This material was not intended or written to be used, and it cannot be used with any taxpayer, for the purpose of avoiding penalties which may be imposed on the taxpayer under U.S. federal tax laws. For those who are not professional investors, this document is provided in relation to Morgan Stanley Investment Management (Japan) Co., Ltd. ("MSIMJ")s business with respect to discretionary investment management agreements ("IMA") and investment advisory agreements ("IAA This is not for the purpose of a recommendation or solicitation of transactions or offers any particular financial instruments. PDF Private Equity Market Update - CAIA Infrastructure and natural resources (NR) overcame broader market headwinds in 2022 to set a new fundraising record of $158 billion (Exhibit 9). This trajectory led to faster adoption; based on data from 1997-2015, unicorn status Chinese Internet startups took an average of four years to reach their $1 billion valuationversus seven years for their U.S. counterparts. Like deal-making, fundraising also saw an upward growth trajectory in 2021 as money flew abundantly into private markets. Although PE firms have been slow to join the digital technology revolution, many are catching up and implementing advanced data and analytics tools to identify new growth opportunities and remain competitive. Quantitative tightening and dislocation in asset prices raised fears of an economic slowdown. McKinseys Private Markets Annual Review: 2017 to 2022. European firms seem to lead the pack, with 27% saying they have either fully implemented digital technologies or are in the advance stages; by comparison, only 20% of North American investors are in the same stage. Under-penetration of financial services and modern retail presented an opportunity for China to develop more advanced solutions than what existed in the West. Real estate deal volume declined 20 percent to $1.1 trillion, also the second-highest year on record. Deal volume fell 20 percent, declining in each consecutive quarter throughout the year (Exhibit 5). VC and growth equity both had their second-largest fundraising year on record, cumulatively accounting for more than 50 percent of PE fundraising for the first time. This document is disseminated in Japan by MSIMJ, Registered No. Outside the US and EU, Eaton Vance materials are issued by Eaton Vance Management (International) Limited ("EVMI") 125 Old Broad Street, London, EC2N 1AR, UK, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority. In 2022, 1,069 more investors committed to the United Nations Principles for Responsible Investment (PRI)3A United Nations-supported network of investors promoting sustainable investment., and a further 88 asset owners became PRI signatories, bringing the total to 681.4Principles for Responsible Investment, annual report, 2022. Italy: MSIM FMIL (Milan Branch), (Sede Secondaria di Milano) Palazzo Serbelloni Corso Venezia, 16 20121 Milano, Italy. Beyond robust GDP growth, under-penetration in many sectors creates opportunity for accelerated growth. Preqin Quarterly Update: Venture Capital Q4 2022 | Preqin Nutzungsbedingungen. Direct lending fundraising declined from 2021, but only marginally, raising over $100 billion for the second consecutive year. PDF 2016 Preqin Global Private Equity & Venture Capital Report a new high. Catch new episodes by subscribing toDry PowderonApple Podcasts,Google Podcasts,Spotifyor wherever you may listen. After more than doubling year over year in 2021, multifamily deal volume fell 29 percent in 2022, accounting for nearly half of the asset classs overall decline in deal activity. While there is generally broad appreciation for growth potential in Asia, there is often an implicit assumption that markets are efficient with commensurate valuations, or, said differently, that higher growth potential means higher valuations.7 That is not necessarily the case in Asia. The 18-month total of $1.7 trillion is by far the strongest year and a half in the industry's history (see Figure 3). Political upheaval (26 %) and the high speed of technological changes (20%) round off the top five risk factors. In the EU, MSIM and Eaton Vance materials are issued by MSIM Fund Management (Ireland) Limited (FMIL). [1]The study centered mostly on General Partners (GP) expectations around deal-making, fundraising, investment strategy, threats to the growth of portfolio companies, and the approach to Environmental, Social and Governance (ESG) factors. Overall, 41% of respondents say that their firms are in the early implementation stage, mainly focusing on using Customer Relationship Management (CRM) and digital platforms for reporting. Private markets fundraising in North America increased by a modest 2 percent year over year but declined in Asia and Europe by 39 percent and 28 percent, respectively. The pattern in 2021 and 2022 was no different: despite rising US Treasury (UST) rates, cap rates decreased and values rose. ESG still clearly faces challenges in its implementation, such as the lack of standardized performance reporting, and will certainly require time before all companies can be on board. Labor shortages in the wake of the pandemic are undoubtedly playing a role in the overall picture. Accordingly, save where an exemption is available under the relevant law, this material shall not be issued, circulated, distributed, directed at, or made available to, the public in Hong Kong. (As of 31/01/2022). Unsurprisingly, growth is a leading factor that makes Asia an appealing target for private investment capital. Outside the EU, MSIM materials are issued by Morgan Stanley Investment Management Limited (MSIM Ltd) is authorised and regulated by the Financial Conduct Authority. Exit volume fell sharply, as sponsors chose to hold assets rather than sell into a declining-valuation environment. For more from Dry Powder on the report, you can listen to Three Essential Trends . 2022 Global Private Equity Outlook | S&P Global Market Intelligence IPM monthly blog - Edition April 2023 | UBS Global Calvert Research and Management, ARBN 635 157 434 is regulated by the U.S. Securities and Exchange Commission under U.S. laws which differ from Australian laws. 13 Russell Reynolds, Transitioning to the Next Generation: Leadership succession within family businesses in Southeast Asia, November 2021. Private market valuation refers to round size, as determined by capital invested divided by no of deals. We asked the CEO of Moonfare what it takes to get ordinary investors up to speed and investing in private equity with confidence. Conclusion In total, 2,543 funds held a final close, a 14% increase on the previous years tally. Private equity funds continued to deliver returns outpacing any other asset class. 2 Preqin, data as of September 2022. However, many are cautious of the growing inflation and rate hikes that may impede the unprecedented rate of investment activity. In a break from years past, PE performed worse than other private asset classes, producing negative returns (through September 30, 2022) for the first time since 2008. More than 40% of both European and North American investors are concerned about the availability of key skills and talent, the highest number across all regions. Planning to Commit More Capital to Private Equity Investors' Expected Capital Commitments to Alternative Assets in the Next 12 Months Compared to the Previous 12 Months 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Private EquityVenture Capital Private Debt Hedge Funds More Capital Same Amount of Capital Real EstateInfrastructure Less Capital S&P Global Market Intelligence Retrieved from: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/private-equity-managers-expect-another-boom-year-in-2022-68394243, [3] Preqin Pro, (as of 07/02/2022). This is of particular concern for LatAm investors: 38% of respondents from the region say that convincing LPs about the right strategy and ability to deploy capital effectively is the biggest fundraising challenge their firm is facing. [14] S&P Capital IQ Pro Platform (as of 14/02/2022). 7 An efficient market is one where the market price is an unbiased estimate of the true value of an investment. Institutional investors sought out the asset class for various features that are attractive in times of market volatility: current yield, floating rates, and relative insulation (via its senior position in the capital stack) from declining valuations. Number Of France-Based Institutions Investing In Private Equity Grows Weitere Einzelheiten knnen aus unseren Nutzungsbedingungen entnommen werden. Number of France-based institutions investing in private equity grows He leads the Private Market team in shaping the strategic direction of the program, plays an active role in sourcing, monitoring of investments and serves on various underlying partnership advisory boards.s. Add-on deals, which tend to be smaller, continued to gain share as a percentage of total deals. The Netherlands: MSIM FMIL (Amsterdam Branch), Rembrandt Tower, 11th Floor Amstelplein 1 1096HA, Netherlands. According to Preqin data,[3]aggregate capitalraised by growth funds hit a new record of $136 billion, up by 60% on the previous year and exceeding the 5-year average of $114 billion. [2] Private equity managers expect another boom year in 2022. Bain's Nirad Jain and Kara Murphy share insights from our annual report. Looking at the investment strategy from the sector perspective, Information Technology (IT) remains the top industry of choice, with 63% of investors planning to deploy capital in this sector. 18% of APAC investors say that LPs demanding diversification and fierce competition against larger firms pose other significant fundraising challenges. 22% of respondents say their firms are exploring digital technologies while 7% say their firms are close to making the final decision. McKinsey research to be published. ASIAN BUSINESSES RIPE FOR PROFESSIONALIZATION First-time fund launches also decreased by 40 percent. As overall GDP growth slows, efficiency improvement will become increasingly more important. Principles for Responsible Investment, annual report, 2022. Calvert Research and Management is exempt from the requirement to hold an Australian financial services licence in accordance with class order 03/1100 in respect of the provision of financial services to wholesale clients in Australia. MSIM's affiliates are: Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd, Calvert Research and Management, Eaton Vance Management, Parametric Portfolio Associates LLC, and Atlanta Capital Management LLC. While Asian private equity can be a difficult segment to diligence and access, MSIM believes that its 20+ year history investing in private equity funds and opportunistic investments in Asia, combined with the broader resources of Morgan Stanley, can help bridge this knowledge gap.1 MSIMs upcoming series on Why Invest in Asia Private Equity? will look to demystify the opportunity, starting out with The Case for Outperformance, which explores some of the drivers of outperformance including accelerated growth/leapfrog potential, valuation arbitrage, and the opportunity for company-level professionalization and efficiency improvement.
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