GROWING interest from non-institutional investors – including family offices and individual investors – will help support a 106 per cent increase in private equity assets under management (AUMs) over the six years to 2029, said private markets data provider Preqin.
The fastest rates of growth will likely continue to be among funds targeting North America, though, followed by Europe. Funds focused on the Asia-Pacific are expected to remain in third place by both AUM growth rates and AUMs.
In a report released on Wednesday (Sep 18), Preqin said private equity fundraising growth – which has slowed recently – should pick up from 2027.
Global AUM is expected to report a compound annual growth rate (CAGR) of 12.8 per cent to reach US$11.97 trillion by end-2029, from US$5.8 trillion at end-2023.
This rate of growth is slower than the 15.1 per cent CAGR for the preceding six-year period, mostly because of a sharp slowdown among North America-focused funds.
AUM in that space is projected to report a CAGR of 13.7 per cent from end-2023 to end-2029, slowing from 17.9 per cent in the preceding period.
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The pace of AUM growth for Apac-focused funds, on the other hand, is likely to be 10.3 per cent from end-2023 to end-2029. This is similar to the 10.9 per cent CAGR in the preceding period, but lags the growth rate in North America as well as the global average.
Cameron Joyce, global head of research insights at Preqin, said one of the key reasons for the comparatively softer growth rate in Apac is the lower expected performance of China-focused funds.
“While there are bright spots in the private equity market across Apac, the markets in question remain comparatively small and so will have less of an impact on the overall picture,” he said.
At the same time, Joyce said, investor interest in Japan and India is “growing significantly”. In Japan, central bank action has re-energised the private capital markets and boosted deal activity. India, meanwhile, has a “strong growth outlook” and is perceived as a beneficiary of evolving geopolitical trends.
“While it is challenging to estimate where the value creation from artificial intelligence will emerge over the next decade, private equity and venture capital-backed companies are likely to capture much of the upside potential,” Joyce added.
“Apac’s relative strength and size of these asset classes should help lift overall alternatives performance for the region.”
Private wealth is expected to account for a growing share of total fundraising, as the larger asset managers build out their distribution channels.
This could, in turn, create more demand for secondaries. Preqin forecasts the structural growth of the secondaries market to exceed that of the primary market.
Secondary funds buy assets from other private equity players. Because the assets purchased are more mature, these funds are typically able to start returning capital to investors at an earlier stage of the fund’s life – which means secondaries are good for creating the liquidity that non-institutional investors value.
