Global alternatives industry poised for slower growth as macro headwinds bite

investmentweek.co.uk:

Global private capital fundraising is set to reach just $1.49trn by 2028, from $1.32trn in 2022, a considerable slowdown after receiving a wave of money in the past decade.

The firm's ‘Future of Alternatives 2028' report found that global alternatives assets under management are expected to reach $24.5trn in 2028, representing a forecast annualised growth rate of 8.4% from 2022 to 2028, falling from 12.3% for 2016 to 2022.

Global private capital fundraising was set to reach just $1.49trn by 2028, from $1.32trn in 2022, a considerable slowdown after receiving a wave of money in the past decade.

While global private equity assets under management are expected to grow at a 10% compound rate from 2022 to 2028, reaching $8.5trn by the end of the period, performance is forecasted to slow to 12.6% over that six-year period, compared to 16% from 2016 to 2022. 

Preqin: Average target size for alternatives ESG funds set to reverse growth trend

Europe AUM is forecast to grow at 8.4%, down from 12.2% in 2016 to 2022, while challenging macroeconomic conditions and geopolitical concerns are set to weigh on the continent's expected returns. 

Preqin's model has anticipated that private equity internal rate of return (IRR) will drop to 10% by 2028, compared with 16.1% in 2016 to 2022. This is almost double the 3.4 percentage point decline in forecast global private equity IRR.

«North America has long dominated the global private equity market, and given the global macroeconomic uncertainty, this may continue,» the report said. «The Eurozone is currently facing higher persistent inflation than the US, while economic growth has been weaker.»

Private equity performance in North America was also expected to decline by 2.7ppts, dropping