Pockets of opportunity emerge in private credit and secondaries

LONDON, Dec. 13, 2023 (GLOBE NEWSWIRE) — Today Preqin, the global leader in alternative assets data, tools, and insights, published its Alternatives in 2024 report, part of the Preqin Global Reports 2024. The report provides analysis on trends on key factors and trends driving the alternative assets industry.

While 2023 is a year so far characterized by market headwinds and a challenging fundraising environment for investors and fund managers alike, Preqin analysts remain optimistic about the outlook for global alternative assets. For instance, private debt fundraising fared relatively well in comparison to other private capital asset classes, while secondaries deal flow should start to pick up going into 2024 as the market comes back into balance.

Cameron Joyce, Head of Private Equity, Research Insights at Preqin, says, “Amid the formidable headwinds marked by swiftly tightening monetary policy and economic uncertainty, alternative assets have remained comparatively resilient. The industry continues to evolve rapidly, and promising opportunities are presenting themselves in areas such as private debt and secondaries. We continue to forecast solid growth for the industry despite softening expectations around fundraising and performance.”

Key highlights from each asset class:

Private equity faces a stern test:

The private equity market has been hampered by rising interest rates – which have weighed on deal activity – and a constrained exit environment. Dealmakers are hoping for an increase in activity during 2024 and long-term investor appetite remains strong.

Venture capital investor sentiment on performance improves:

Venture capital returns have been challenged by factors such as the poor exit environment, elevated asset valuations, and climbing interest rates. Noting this, our latest investor survey shows that investors’ outlook is shifting, and they are comparatively more positive on the performance of the asset class over the next 12 months.

Private debt fundraising holds up:

Private debt’s floating-rate structure and seniority in the capital stack are especially attractive for investors seeking more defensive assets in challenging conditions, with strategies such as mezzanine debt growing in popularity.

Hedge funds’ AUM rises despite net outflows:

Hedge funds’ AUM growth has been driven primarily by asset returns and not inflows and outflows. In fact, hedge fund returns during months of market volatility proved that they can be effective in providing investors with downside protection. Niche strategies such as cryptocurrencies and insurance-linked securities (ILS) gained prominence due to their low public market correlation.

Real estate under pressure:

Rising interest rates have weighed on investment sentiment, resulting in weaker fundraising and deal activity. As investors flock toward larger funds in search of a sense of security, fundraising has been even more challenging for first-time and smaller funds.

Infrastructure may be turning a corner:

Fundraising fell sharply in 2023, a significant reversal after fund managers amassed record sums in 2022. But third-quarter deal activity proved robust and tailwinds from energy transition will continue to underpin the long-term growth of unlisted infrastructure.

For more information, contact Mimi Celeste Taylor at mimiceleste.taylor@preqin.com.  

Notes to the editors

Alternatives in 2024 is a freely available version to accompany the Preqin Global Reports 2024. This complimentary report explores the impact of macroeconomic headwinds and market volatility on alternative assets this year and beyond.

If you are a full-time member of the press and would like to receive a full copy of any of the following reports, please get in touch: Private equity, venture capital, private debt, hedge funds, real estate and infrastructure. For non-press, the 2024 Preqin Global Reports are available for Preqin Insights+ subscribers.

About Preqin

Preqin, the Home of Alternatives, empowers financial professionals who invest in or allocate to alternatives with essential data and insight to make confident decisions. It supports them throughout the entire investment lifecycle with critical information and leading analytics solutions. The company has pioneered rigorous methods of collecting private data for over 20 years, enabling more than 200,000 professionals globally to streamline how they raise capital, source deals and investments, understand performance, and stay informed. For more information visit www.preqin.com.

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