Global alternatives market set to reach $24.5T, private credit AUM to double
Growing demand for alternative assets will add more than $8 trillion to assets under management in the next five years, to a total $24.5 trillion, according to a new report.
According to the forecast from industry analysts Preqin, the global alternative assets market will grow at an annualized growth rate of 8% between 2022-2028.
Among the key takeaways from the report, global private debt AUM is forecast to double its 2022 total of $1.5 trillion to a new record high of $2.8 trillion, a compound annual growth rate of 11%.
“Private debt performance is expected to be stronger than in the past, thanks in part to a positive outlook for distressed debt strategies. For 2016 to 2022, its internal rate of return was 9.11%, a figure forecast to rise to an average 9.81%, from 2022 to 2028,” the report states.
North America has a significant role to play in the growth for private debt with AUM growing from $1.0tn in 2023 to $1.7tn by the end of 2028.
The Future of Alternatives 2028 report also forecasts that global private capital fundraising is set to reach $1.49tn by 2028, from $1.32tn in 2022.
Venture capital, especially funds targeting North America, has a weakened outlook according to Preqin with CAGR of 14%, compared to the 19% it was forecasting a year ago.
Its new forecast AUM for 2027 is $3.5tn, revised down from $4.2tn as cited in its October 2022 forecast. Although North America will lead growth worldwide, it will be at a slower pace than previously expected.
“Geopolitical risks and rising long-term bond yields are two of the factors behind more moderate fundraising activity and performance expectations,” said Cameron Joyce, SVP, head of private equity, at Preqin. “In spite of these challenges, the industry is expected
Read more on investmentnews.com
