Revisiting our bird’s-eye view of US private markets

On Oct 1, 2022

Private market investments, by their very nature, are long-term endeavors.

Funds typically take years to fully deploy capital, and 10+ year fund horizons make measurement of private market performance a view over decades.

With that understanding, day-to-day tracking of financial markets is less meaningful for this portion of an allocator’s portfolio.

Still…

The last few months have suggested that something of a regime shift for markets is underway. High inflation, rising rates, low (negative) economic growth, and 2021’s overoptimism have made the present downturn impossible to ignore for private market investors.

To cover the broad implications of the macro environment on alternative assets, we launched our Quantitative Perspectives: US Market Insights last year near the height of the euphoria. One year on, and the climate has clearly shifted.

This week we released our second edition, covering everything from macroeconomics, private equity, venture capital, real assets, and debt markets.

Spotlighted in this edition, we estimate that new investor interest in committing capital to private funds has dwindled in 2022—that’s despite robust fundraising figures.

The difference in our analysis is that we measure an allocator momentum metric by looking at new capital deployed in respective strategies, over and above the recycling of distributions from 2021 and relative to strategy size.

The results show a pullback for buyout funds and a slowing of momentum for VC and PE growth vehicles. The chart below compares estimated new deployable capital across equity strategies to their prior year’s AUM.

Some additional quick highlights include:

We estimate the market cap of PE- and VC-backed companies at more than $6 trillion combined.

Capital raising for infrastructure funds has already surpassed 2021 figures, with $55.6 billion closed. Plus, new deployable capital as a share of 2021’s AUM is a robust 11.8% this year.