2022 preqin global private equity venture capital report 2022 preqin global private equity venture capital report
A surge in deal-making drove global private equity deal value to a total of $603 billion as of October 2021, or $804 billion on an annualized basis, which Preqin notes would surpass a record the industry set in 2007. Retrieved from: https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/article?id=66494139. [11] S&P Capital IQ Pro Platform (as of 25/01/2022). AUM has now grown at an annual rate of nearly 20 percent since 2017. 2022 Preqin Global Venture Capital Report | Preqin Source: Preqin Pro as of September 30, 2022, COPYCAT MODELS ACCELERATING GROWTH Banking Essentials Newsletter: 5th May Edition, Enterprise 'shippers' seek help with supply chain digital transformation, have budget to spend, Private Markets 360 | Episode 3: Finding efficiency with technology (with Nick Fox of AEA Investors). . Outside the US and EU, Eaton Vance materials are issued by Eaton Vance Management (International) Limited ("EVMI") 125 Old Broad Street, London, EC2N 1AR, UK, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority. NOT FDIC INSURED | OFFER NO BANK GUARANTEE | MAY LOSE VALUE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY | NOT A DEPOSIT. Welcome to Preqin's first ever Global Alternatives Report dedicated solely to Venture Capital. Performance of every private markets asset class declined relative to 2021 but continued to outperform public market equivalents at current marks, though private market valuation changes often lag those in public markets. 2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGES CONTENTS CEO's Foreword - Mark O'Hare 4 1: 2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT Keynote Address - Joseph Bae, KKR 6 Keynote Address - Capturing Megatrends Growth through Minority Stakes - Stanislas Cuny, Amundi 8 2: OVERVIEW OF THE PRIVATE EQUITY . Leapfrog tech potentially has the ability to further accelerate growth, thereby offering the opportunity for outsized returns. The report finds that despite solid foundations, last year was slow for both fundraising and investments, while performance held up better than the global . Venture capital assets under management tripled between December 2016 and March 2021, from $574bn to $1.68tn. Natural resources strategies, meanwhile, generated relatively strong performance for a second consecutive year, buoyed by elevated commodity prices. Further, there is a local-global arbitrage opportunityidentifying a company at a well-priced local market entry valuation, repositioning the company for global markets, and exiting at a premium valuation commensurate with a global company. On the surface, historical private equity (PE) performance in Asia has been shown to be on par with performance numbers generated in other regions. Beyond China (which is currently facing its own challenges), leapfrog potential exists in other parts of Asia. Its 2022, and were coming off an extremely busy year in private equity. The median VC and growth funds lost 6.3 and 7.3 percent, respectively, through the first three quarters of 2022, while the median buyout fund earned 0.9 percent. According to Preqin data,[3]aggregate capitalraised by growth funds hit a new record of $136 billion, up by 60% on the previous year and exceeding the 5-year average of $114 billion. Concerns about the availability of skills and talent as a threat to the growth of portfolio companies have doubled from last year, climbing to 36% from only 17% in 2021. OPERATING EFFICIENCY AN OVERLOOKED RETURN DRIVER equity, real assets, and debt capital markets. TECH AS A LEAPFROG OPPORTUNITY APAC investors are the most enthusiastic at 91%. Like the strategies for other asset classes, infrastructure and NR strategies were affected by macroeconomic challenges. McKinsey research to be published. Still, private markets outperformed public markets on the way down, whether due to truly more resilient portfolios, a lag in timing, or manager discretion over their marks (private markets tend to mark up less quickly during ascending markets and mark down less quickly in falling markets). Preqin Quarterly Update: Venture Capital Q4 2022 | Preqin In Indonesia, for example, stakeholders including entrepreneurs, venture capital (VC) funds and politicians, are working in concert to pre-empt potential fintech-related regulatory issues observed in the U.S. and China, such as crackdowns in the peer-to-peer lending space. By navigating unique cultural and geopolitical situations, arbitrage opportunities, and positioning companies well for exit, sophisticated GPs can capitalize on the inefficiencies of this market dynamic to buy low, sell high., Professionalization and Efficiency Improvement An Additional Source of Alpha. These disruptions had substantial and varied impacts on private markets fundraising, performance, and AUM growth, with steep declines in certain regions and strategies, and pockets of resilience in others. The flow of capital into the asset class has pushed investors to look beyond traditional core infrastructure assets (Exhibit 10). Source: AVCJ Research, as of 31 December 2022. 37% think it will remain the same, a slight increase over 2021 when only 27% of investors expected deal activity to remain flat. Each year since its inception, this annual publication has discussed new records in fundraising and deal flow while celebrating strong performance across asset classes. It has been a positive year for ESG with a broad recognition of ESGs importance from all stakeholders and acknowledgement of its role in value creation. Shifting Gears: Private Equity Report Midyear 2022 - Bain 22% of respondents say their firms are exploring digital technologies while 7% say their firms are close to making the final decision. For some strategies, a contingency fee may be incurred in addition to the fee mentioned above. European investors appear to have the most confidence about the industrys outlook, with 98% predicting that deal-making activity will either improve or remain the same. Federal and state tax laws are complex and constantly changing. Exit activity bounces back and set for another active year. Concerns over start-ups' high burn rate and limited exit options caused by a global equity sell-off have extended funds' holding periods and slowed capital distribution. Performance also declined from 2021s high as lower marks offset current yield gains. Global private markets fundraising declined by 11 percent to $1.2 trillion. Beyond localized operations, the ability to adapt to unique customs can be both a hurdle and opportunity. All investment profits and losses belong to the clients; principal is not guaranteed. S&P Capital IQ Pro. Most of the current fund commitment decisions were made last year, which was impacted by the denominator effect as public markets . Global Private Equity Report For illustrative purposes only.[8]. FT Adviser. Increasing representation across all levels will require managers to take fresh approaches to hiring, retention, and promotion. Retrieved from: https://www.ftadviser.com/investments/2021/10/07/investing-in-the-next-generation-of-healthcare-opportunities/, [6] M&A Year in Review 2021. MSIM announced today that the 1GT climate private equity strategy (1GT) co-led a $50 million Series B funding round for Everstream alongside existing investors StepStone Group and Columbia Capital. 11 Bain & Company, "Asia-Pacific Private Equity Report 2022". 2022 Preqin Global Private Equity Report | Preqin Vintage years beyond 2017 have been excluded as performance is less mature and may be too early to tell. All forecasts are speculative, subject to change at any time and may not come to pass due to economic and market conditions. Considerations for diversity, equity, and inclusion (DEI) have become an important part of the fundraising, hiring, and investing landscape in private markets. The growth rate was lower [14], Private Equity firms gradually catching the digitalization train. As measured by year-to-date IRR as of September 30, 2022, for global funds vintages between 2000 and 2019. 2021 was a record year for the PE industry as investment activity surpassed the trillion-dollar mark for the first time. However, cap rates started expanding toward the end of 2022, signaling heightened uncertainty across real estate markets. It's our market overview from Bain & Company's 2022 Global Private Equity Report. Globally, the number of companies that are beginning to implement ESG-related practices has decreased since the previous year, indicating that many companies are already well into their ESG journey. As bank financing dried up in the second half of the year, private lenders stepped into the void, providing financing for more than 80 percent of PE transactions in the middle market. First and foremost, the evidence supporting a positive correlation between ESG and financial performance continues to mount, as long as the underlying company is healthy. He leads the Private Market team in shaping the strategic direction of the program, plays an active role in sourcing, monitoring of investments and serves on various underlying partnership advisory boards.s. Sustainability-related deals (the "E") increased by 7 percent to nearly $200 billion, proving resistant to the deal-making headwinds that affected other asset classes. www.preqin.com, [4] S&P Capital IQ Pro Platform (as of 27/01/2022). 48% of respondents were senior level professionals. Beyond robust GDP growth, under-penetration in many sectors creates opportunity for accelerated growth. Even in 2020, when activity stalled briefly during the early months of the COVID-19 pandemic, private markets hummed again in the second half. Principles for Responsible Investment, annual report, 2022. On some diversity metrics, private markets firms compare favorably with corporate America, although ethnic diversity is not yet broad based. Core-plus and value-add strategies are now investing in new asset categories and infrastructure service providers as GPs seek to accommodate the return expectations of a new class of infrastructure investor. 2021 was an exceptional year for exits: not only did the number of exits increase by 34% from 2020, but exit value also increased by 57%. January 31st, 2023. Sustainability-related deals (the E) increased by 7 percent to nearly $200 billion, proving resistant to the deal-making headwinds that affected other asset classes. Institutional investors sought out the asset class for various features that are attractive in times of market volatility: current yield, floating rates, and relative insulation (via its senior position in the capital stack) from declining valuations. Geographically, 45% of respondents were from Europe, 19% were from North America, 15% were from APAC, 8% were from the Middle East & Africa and 13% were from Latin America. Under an IMA, with respect to management of assets of a client, the client prescribes basic management policies in advance and commissions MSIMJ to make all investment decisions based on an analysis of the value, etc. Andrew Slimmon, Lead Portfolio Manager der Fonds und Strategien des Applied Equity Advisors Teams, teilt seine Einschtzung der Finanzmrkte. In closed-end funds, AUM reached a new peak, as it has every year since 2016, and managers raised the second-highest total on record, led by commitments to opportunistic vehicles. The prevailing market uncertainty also served as a shot in the arm for private credit deployment opportunities. Geopolitical risks, currency risks, and exits/liquidity are important considerations for investors contemplating an allocation to Asian private equity, and adequately addressing these risks are undoubtedly key to achieving positive performance in Asian markets. Get the long story short in the latest episode of our Dry Powder podcast. A Private Equity Lens on the Energy Transition The global shift away from carbon-based fuels is gaining momentum. Closed-end fundraising declined 23 percent year over year. Despite these challenges, 2022 is likely to be the second-best fundraising year on record (after all data is reported), demonstratingthus fardiscipline and longer-term thinking by LPs. Die auf dieser Website beschriebenen Dienstleistungen sind unter Umstnden nicht in allen Rechtsgebieten oder fr alle Kunden verfgbar. content www.capitaliq.spglobal.com, [5] Investing in the next generation of healthcare opportunities. Indeed, LatAm grew by an outstanding 225%, to $19.5 billion in 2021 from almost $6 billion in 2020, with the top 12 deals accounting for a third of the total deal value in the region. Datenschutz SCARCITY VALUE DRIVES SIGNIFICANT EXIT PREMIUMS 'Private Capital' will refer to the broader spectrum of private closed-end funds, including private equity, private debt, private real estate, infrastructure and natural resources. Out of those PE firms that have been fundraising in the last 12 months, a quarter indicated that convincing Limited Partners (LPs) about the investment strategy and source of competitive advantage is the biggest challenge faced during the process. Please read and agree to the Privacy Policy. This material is only intended for and will only be distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations. On aggregate those funds raised $845.5 billion capital across various strategies, with growth capital funds seeing the largest upsurge. Jim Caron, Co-Lead Global Portfolio Manager and Co-Chief Investment Officer of the Global Balanced Risk Control (GBaR) Team, shares his macro thematic views on key market drivers. More private markets managers are incorporating considerations for ESG factors into their corporate policies, operating procedures, and investment decisions. From 2021 to 2022, total PE fundraising activity dropped around $100 billion with the top 10 closed funds representing nearly a third of total funds raised, according to PitchBook's 2022 Annual Global Private Market Fundraising report. [1] The survey was conducted over the period of 15 weeks between October 4, 2021, and January 16, 2022. Capital deployments into larger vehicles increased as investors re-upped with existing managers while forgoing commitments to smaller and newer managers. Healthcare follows IT as the second top industry, up to 47% from 43% in 2021, attracting more investors as the sectorcontinues to offer opportunities, especially in the Healthcare Technology industry. The research defines outperformers as companies whose score on a series of assessed ESG metrics improved over time. This publication has not been reviewed by the Monetary Authority of Singapore. From a GPs perspective, effecting operational change requires more effort and a specialized skill set, as well as significant influence on a company which is often lacking in minority stake deals (the predominant deal type in much of Asia). 37% think it will remain the same, a slight increase over 2021 when only 27% of investors expected deal activity to remain flat. More than three-quarters of firms (77%) say they are planning to exit their portfolio companies, marking an increase from last year (66%). LPs concentrated commitments among large funds as many investors chose to re-up with known, tested names while forgoing commitments to smaller, newer managers. All clients should read the Documents Provided Prior to the Conclusion of a Contract carefully before executing an agreement. Number Of France-Based Institutions Investing In Private Equity Grows To date, top-line revenue growth has been the largest contributor to Asian PE returns.11 This is unsurprising, given that until recently growth has been easy to come by in Asian markets, making efficiency (and hence margin) improvement less of a focus. An example of this are the shares of Indian banks and non-bank finance companies (NBFCs) where the highest quality banks/NBFCs trade at Price/Book multiples 3-7x that of the market median.10. /pub/content/dam/im/json/imwebdata/im/data/misc/translation/translation.json, /pub/content/dam/im/json/imwebdata/im/data/misc/translation/aggTranslation.json. LatAm investors especially seem to have accelerated the adoption of ESG principles: the number seeking investments in companies with a good ESG track record has nearly doubled from last year, to 43% from 25%, while the number of firms that are not considering ESG factors has decreased considerably, to only 7% from 19% in 2021. FMIL is regulated by the Central Bank of Ireland and is incorporated in Ireland as a private company limited by shares with company registration number 616661 and has its registered address at The Observatory, 7-11 Sir John Rogersons Quay, Dublin 2, D02 VC42, Ireland. 2022 will prove to be the best year yet for ESG-focused fundraising, with $24 billion raised through the first half of the year. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," continue" or "believe" or the negatives thereof or other variations thereon or other comparable terminology. Both sectors attractiveness has increased from last year (30% and 26% respectively). At the same time, deal volume grew by 41.6% over 2020, proving that investors predictions of improved deal-making in 2021 came to fruition. Registered No. By Cameron Joyce, CFA and Michael Patterson. While the industry continues to digitize rapidly, companies leading that effort found fundraising more difficult than in years past. document.write(new Date().getFullYear()); MorganStanley.Alle Rechte vorbehalten. As in 2020, when private debt was the only private asset class that recorded fundraising growth, investors ability to allocate to one or another strategy based on the prevailing market environment has contributed to consistent top-line growth through business cycles (Exhibit 7). While emerging Asian countries generally lag in terms of adoption of traditional banking products (e.g., credit cards),5 consumers in emerging Asia over-index on adoption of fintech products.6 Knowledge gains from more established regions can serve as the foundation for even better solutions in more emerging Asian regions. Nutzer mssen die Nutzungsbedingungen lesen und akzeptieren, da in diesen bestimmte gesetzliche und regulatorische Auflagen enthalten sind, die fr die Verbreitung von Informationen zu den Anlageprodukten von Morgan Stanley Investment Management gelten. The number of IPOs in LatAm in 2021 was on par with 2020, a levelling out of the steep increases seen in 2019, with most of them taking place in Brazil. Global PE performance turned negative for the first time since 2008, posting a 9 percent return through September1As measured by year-to-date IRR as of September 30, 2022, for global funds vintages between 2000 and 2019. and ending a five-year run as the highest-performing private asset class. The investment strategies described in the preceding pages may not be suitable for the recipients specific circumstances; accordingly, you should consult your own tax, legal or other advisors, both at the outset of any transaction and on an ongoing basis, to determine such suitability. While Asian private equity can be a difficult segment to diligence and access, MSIM believes that its 20+ year history investing in private equity funds and opportunistic investments in Asia, combined with the broader resources of Morgan Stanley, can help bridge this knowledge gap.1 MSIMs upcoming series on Why Invest in Asia Private Equity? will look to demystify the opportunity, starting out with The Case for Outperformance, which explores some of the drivers of outperformance including accelerated growth/leapfrog potential, valuation arbitrage, and the opportunity for company-level professionalization and efficiency improvement. Venture capital accounted for 40 percent of this total, while on a sectoral basis, power and transportation targets led the pack for the third year running. 2022 Diversity, Equity, and Inclusion Report. Amid current financial market volatility, investors are revisiting asset allocations in their portfolios, hoping to identify attractive market segments with upside potential. of the securities, and MSIMJ accepts such commission. The client shall delegate to MSIMJ the authorities necessary for making investment. 11 Bain & Company, Asia-Pacific Private Equity Report 2022. Eine zeitgerechte Analyse markt-verndernder Ereignisse und deren Wirkung auf das Anlageumfeld. Another prevailing theme for the upcoming months to grow in significance will be digitalization. Notably, 40% of respondents from North America and 26% from Europe claim that they dont face any major challenges, while only 11% of LatAm investors and 13% of Middle East investors feel the same. Globally, private equity generated $512 billion in buyout deal value during the first half of 2022, putting it on pace to produce the second-highest annual total ever (behind 2021's all-time record). Changes in consumer behavior is no longer one of the top five factors of concern, decreasing to 17% this year from 26% in 2021%) as firms now have a better gauge of consumer reactions to the pandemic and have adjusted their strategies accordingly. S&P Global Market Intelligence. 10 Morgan Stanley Research, Investor Presentation India Banks, November 11, 2022. Under-penetration of financial services and modern retail presented an opportunity for China to develop more advanced solutions than what existed in the West. Private Equity & Venture Capital Net IRR from 2002-2017 by Primary Geographic Exposure Source: Preqin Pro as of September 30, 2022 . The statements above reflect the opinions and views of the Morgan Stanley Private Markets Solutions as of the date hereof and not as of any future date and will not be updated or supplemented. This is prepared for sophisticated investors who are capable of understanding the risks associated with the investments described herein and may not be appropriate for the recipient. Critical in this endeavor is the identification of private equity managers which possess the appropriate skills and requisite experience to manage the regions unique challenges. This publication, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. [7] S&P Capital IQ Pro Platform (as of 27/01/2022). Labor shortages in the wake of the pandemic are undoubtedly playing a role in the overall picture. European firms seem to lead the pack, with 27% saying they have either fully implemented digital technologies or are in the advance stages; by comparison, only 20% of North American investors are in the same stage. The 18-month total of $1.7 trillion is by far the strongest year and a half in the industry's history (see Figure 3). MSIM, the asset management division of Morgan Stanley (NYSE: MS), and its affiliates have arrangements in place to market each others products and services. On the supply side, the closing of a record number of global megafunds boosted fundraising. In India, where valuations are persistently high, GPs can structure a win-win two-stage deal that involves an initial investment at a reasonable entry valuation, work alongside the entrepreneur to improve the operations and positioning of the company, and eventually exit together at a premium valuation. This can lead to less friction as industries grow. In terms of advanced digitization, 14% declare their organizations have advanced to the point of leveraging data science for automated deal sourcing and due diligence, while only 7% of respondents said that digital technologies have been fully implemented into their playbook. Stay ahead in a rapidly changing world. And while infrastructure and NR fund performance declined somewhat from 2021, these funds were the top-performing private markets asset classes in 2022. In office, for example, net absorption turned positive as attendance rates seemingly reached a new equilibrium. Vintage years beyond 2017 have been excluded as performance is less mature and may be too early to tell. In particular, megafunds gained prominence: 11 funds of more than $10 billion each were raised, totaling $170 billion collectively (Exhibit 4). Environmental issues and regulations, lack of financing and raw materials, logistics and high valuations are other topics of concern on investors minds. Trial by fire: Indian PE ecosystem resilient in a globally challenging year. [8] Multiple selections were allowed. Together, we achieve extraordinary outcomes. Exit volume fell sharply, as sponsors chose to hold assets rather than sell into a declining-valuation environment. Valuation multiples have been falling across both public and private markets, with venture capital positions arguably the most . Venture capital is gearing up for a cold spell as portfolio companies' growth and fundraising are slowing. The number of buyout and growth deals greater than $500 million decreased by 33 percent. Private markets fundraising in North America increased by a modest 2 percent year over year but declined in Asia and Europe by 39 percent and 28 percent, respectively. Private markets deal volume plummeted, performance declined, and valuations felldramatically in certain sectors. A defining characteristic of Asian markets is the way geopolitical and cultural factors inform how business is done. The 2022 Preqin Global Private Equity Report offers the industry's most complete and in-depth annual review. And multifamily and industrialsectors benefiting from changes in living and shopping behaviorsoftened after rapidly rising rents and occupancy of the past two years boosted performance (Exhibit 6). Note: Credit Card Penetration as defined by percentage of people age 15+ who use credit cards Source: Statista, data as of June 2022, Source: PPRO Asia Pacific, Western and Central Europe, North America Payments and e-commerce report 2022. Asian Private Equity: Wheres the Risk Premium? Morgan Stanley Investment Management (MSIM) views private equity in Asia as a potential bright spot for investors that offers the opportunity for outperformance, particularly at the current juncture. In 2022, mezzanine strategies were most in favor, posting record fundraising totals and more than tripling 2021s haul. Dry powder inventorythe amount of capital available to GPs expressed as a multiple of annual deploymentspiked. Consideration of ESG is not limited to fundraising and deal activity. The mood changed in early summer. Alle Morgan Stanley Investment Funds anzeigen, View All 1GT: Climate Investing Reinvented. PDF PREQIN GLOBAL - bebeez.it In the private markets, first-half deal activity softened but subtly so, nearly matching the record-setting pace set in 2021. For the fifth consecutive year, S&P Global Market Intelligence conducted an annual survey among PE and VC practitioners to measure industry outlooks for the upcoming 12 months. AUM grew as well, reaching a new high of $1.3 trillion, 14.2 percent higher than in 2021. Each MSIM affiliate is regulated as appropriate in the jurisdiction it operates. LP willingness to allocate more capital to diverse deal teams is prompting more GPs (52 percent in 202122) to share DEI data during fundraising. As overall GDP growth slows, efficiency improvement will become increasingly more important. Mobile solutions such as real-time online loans to the unbanked, leveraging digital information, cross-border transfers at lower friction/cost, etc., are all helping to boost financial inclusion in Southeast Asia. For real estate, 2022 was a year of relative highlights and challenges, with previously-struggling sectors finding stability, and top-performing sectors slowed by tailwinds. [2] Private equity managers expect another boom year in 2022. In China, state-owned enterprises make up approximately 40% of GDP.12 These companies have traditionally been less nimble and commercially focused than their private counterparts, with many straightforward areas for operational improvement. Accordingly, save where an exemption is available under the relevant law, this material shall not be issued, circulated, distributed, directed at, or made available to, the public in Hong Kong. Italy: MSIM FMIL (Milan Branch), (Sede Secondaria di Milano) Palazzo Serbelloni Corso Venezia, 16 20121 Milano, Italy. IPOs remain the first choice of exit methods among APAC investors (39%), and it is also increasingly attractive to LatAm investors, rising to 22% from only 4% last year. On average, 56% of respondents believe deal activity will improve in the next 12 months. Across the entire investment life cycle, from fundraising and asset selection to value creation and exit planning, ESG is on the minds of investors (Exhibit 11). Hong Kong: This material is disseminated by Morgan Stanley Asia Limited for use in Hong Kong and shall only be made available to "professional investors" as defined under the Securities and Futures Ordinance of Hong Kong (Cap 571). Download the Complimentary Report. Despite this, stakeholders are expecting 2022 to be a year of action on ESG issues, not just for climate change as expected but also for rising concerns over social issues[10].
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