McKinsey has recently published a Global Private Markets Review 2024 report. A few key findings that could help investors guide their decisions through these turbulent times. First, let’s talk about critical points that define the current environment:
- Macroeconomic troubles continue. 2022 was ripe with fundraising and deal activity, 2023 slowed down significantly, and private markets’ performance was below historical averages.
- Global fundraising declined by 22% to $1 tn, the lowest since 2017. However, various strategies performed vastly differently: PE buyout strategies showed record positive dynamics.
- LP remained overexposed to private markets compared to target allocations. Therefore, LPs remain committed to private markets and plan to increase allocations.
- Investors preferred investing in well-known names and large funds. The 25 most successful ones collected 41% of aggregate commitments. New manager formation fell to the lowest level since 2012 (651 new firms in 2023).
- Dry powder spiked. Private markets AUM totaled $13.1 tn as of June 30, 2023. Dry powder increased to $3.7 tn, marking the 9th year of growth.