The Power of Private Markets
Today, all the action is happening behind closed doors. According to a recent survey by BlackRock, sophisticated investors now hold?24% of their portfolio in private assets. Moreover, the total assets under management (AUM) in private markets have reached?USD 11.7 trillion, and it appears that this is just the beginning. Preqin predicts that the figure will skyrocket to?USD 23.3 trillion?by 2027.
As of the 19th century, stock and bond markets revolutionized business finance around the world. They provided companies with new sources of liquidity to expand and investors with new ways to invest. However, over the last three decades,?private capital?has ushered in a new era.
Remarkably, companies are now choosing to stay private for longer. Indeed, the median number of years from the venture capital (VC) funding phase to an IPO in the US has increased from 8 years in the 1980s to?11 years in the 2000s. Additionally, certain promising companies which have long been on everyone's lips, like Twitter, have been opting to maintain their private status.
Investors who fail to adapt to this new market reality will miss out on some of the best-emerging growth opportunities of our time. Can you afford to miss it?
The growth of private capital
Private capital has experienced three decades of remarkable growth and shows no signs of slowing down. While its growth was interrupted by the global financial crisis in 2008, and more recently by the pandemic, it very quickly recovered, as can be seen in the fundraising chart below. Notably, North America and Europe are responsible for most of this substantial growth.
This growth in fundraising combined with capital appreciation and income generation has helped private markets’ AUM grow by nearly?18%?per year since 2018. As of June 30, 2022, AUM had reached an impressive?USD 11.7 trillion.
While there is still significantly more AUM in global public markets, the value of private markets has been rapidly expanding. This trend can be seen in the chart below which illustrates that the IRR for private equity (PE) was generally higher than all other asset classes between?2017 and 2021. Although all asset classes faced a downturn in performance in 2022, including PE, Bain & Company estimates that PE firms concluded the year with around?USD 3.7 trillion?in dry powder ready to be invested.
领英推荐
Find out the full article and the drivers of private capital growth on our website.
Moonshot?is a globally active network of accredited investors, including visionary entrepreneurs, scientists, specialists, and like-minded individuals or institutions that join forces to access opportunities in private markets, foster networking and self-growth, curate knowledge, and enjoy unique privileges.
Our members get instant access to private equity, private debt, venture capital, private real estate, and pre-IPO deals structured and issued in Switzerland, starting from only CHF 10'000. Find out first about our new developments and exclusive offers on the website:?moonshot.ch
Please take a look at our previous article: