2022 preqin global private equity venture capital report

For those that can identify and partner with such private equity managers, there exists a promising opportunity for outperformance in the region. These conclusions are speculative in nature, may not come to pass, and are not intended to predict the future of any specific Morgan Stanley investment. Source: S&P Capital IQ as of 28 February 2023. SCARCITY VALUE DRIVES SIGNIFICANT EXIT PREMIUMS research Please consider the investment objectives and nature of risks before investing. Macroeconomic headwinds, including rising inflation and interest rates, coupled with negative public market performance (17.7 percent) triggered the aforementioned denominator effect, and LPs scaled down new commitments. Today on Dry Powder, well cover the essential indicators of 2021, which can inform your strategy in 2022 and beyond. 20% of all survey participants think that large LPs pouring capital into fewer funds with established LP-GP relationships is the second most common challenge, a sentiment felt most by European investors (23%). We work with ambitious leaders who want to define the future, not hide from it. In the context of elevated investment levels, this likely suggests that investors are growing wary of risks such as inflation, rising interest rates and high valuations that could put the brakes on this unprecedented pace of transactions.[2]. In Europe, an 11-year run of fundraising growth ended, largely due to geopolitical instability and broader macroeconomic challenges, including volatility in foreign currency exchange rates. More than 40% of both European and North American investors are concerned about the availability of key skills and talent, the highest number across all regions. McKinseys Private Markets Annual Review: 2017 to 2022. 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. Aforementioned challengesthe higher cost and lower availability of debt, rapidly declining public market valuations, and macroeconomic uncertaintystifled growth, activity, and performance in what had been the best-performing private markets asset class for many years running. North America largely led this increase, accounting for 76% of the total deal value. Venture capital is gearing up for a cold spell as portfolio companies' growth and fundraising are slowing. By Cameron Joyce, CFA and Michael Patterson. Going into 2022, all regions are clearly at different stages of digital technology adoption. This has the knock-on effect of weakening fundraising, and we . By contrast, Asia-Pacific (APAC) respondents maintain the most cautious view. On the surface, historical private equity (PE) performance in Asia has been shown to be on par with performance numbers generated in other regions. MSIM's affiliates are: Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd, Calvert Research and Management, Eaton Vance Management, Parametric Portfolio Associates LLC, and Atlanta Capital Management LLC. Looking at the investment strategy from the sector perspective, Information Technology (IT) remains the top industry of choice, with 63% of investors planning to deploy capital in this sector. Calvert Research and Management is exempt from the requirement to hold an Australian financial services licence in accordance with class order 03/1100 in respect of the provision of financial services to wholesale clients in Australia. While the industry continues to digitize rapidly, companies leading that effort found fundraising more difficult than in years past. Spain: MSIM FMIL (Madrid Branch), Calle Serrano 55, 28006, Madrid, Spain. Vintage years beyond 2017 have been excluded as performance is less mature and may be too early to tell. Indeed, real estate performance has exceeded inflation in six of the last seven inflationary periods, in part due to cap rate compression even during a rising interest rate environment. Even in 2020, when activity stalled briefly during the early months of the COVID-19 pandemic, private markets hummed again in the second half. 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. Source: S&P Global Market Intelligence. 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). Eine monatliche Publikation mit den neuesten Einblicken des Global Multi-Asset Teams zum Wirtschafts- und Marktumfeld und zur optimalen Portfoliopositionierung. 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. Expanding capitalization (cap) rates across sectors, which represent the multiple investors are willing to pay for net operating income (NOI), drove performance lower. Note that the data discussed here is limited to only what is reported to Preqin; as a result, the dataset may suffer from survivorship bias. Registered Office: Beethovenstrasse 33, 8002 Zurich, Switzerland. The economic effects of the pandemic continue to linger; however, as PE/VC firms have gained more experience with its impact, it has become less of a concern, dropping to second place this year (48%). On some diversity metrics, private markets firms compare favorably with corporate America, although ethnic diversity is not yet broad based. The discrepancy this year drove private market allocations higher on a percentage basis across institutional portfolioscloser to preexisting targets for most, and above targets for many limited partners (LPs)triggering the so-called denominator effect. This progress is a result of many factors. This is of particular concern for LatAm investors: 38% of respondents from the region say that convincing LPs about the right strategy and ability to deploy capital effectively is the biggest fundraising challenge their firm is facing. High inflation persisted throughout most of 2022, prompting central banks around the world to increase interest rates at a historic pace. Banks began to pull back, unwilling or unable to lend. Registered Office: 25 Cabot Square, Canary Wharf, London E14 4QA. (As of 16/11/2021). This can lead to less friction as industries grow. PE/VC firms considering investment in the Consumer sector plan to focus on the Consumer Retail (24%) and Consumer Producers sub-sectors (18%), while taking rather a cautious approach to Consumer Leisure (8%). This has played out among Korean tech companies where early-stage investments are limited to local VCs, keeping valuations modest. Each region benefited from an investment spree, with Latin America (LatAm) and North America (NA) witnessing the highest uptick in aggregate deal value year-on-year. Beneath these headline statistics, revolutions in energy, mobility, and digitization are changing the face of infrastructure investing. Private markets have enjoyed strong tailwinds since the depths of the Global Financial Crisis (GFC). Each year since its inception, this annual publication has discussed new records in fundraising and deal flow while celebrating strong performance across asset classes. In almost every regard, 2021 was an exceptional year (as we highlightedin last years report) but it was not a trend breaker. 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). SPACs are playing a new role in the market dynamics, particularly in the U.S. It's our market overview from Bain & Company's 2022 Global Private Equity Report. For illustrative purposes only. 2 Preqin, data as of September 2022. 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. This publication, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. More than three-quarters of firms (77%) say they are planning to exit their portfolio companies, marking an increase from last year (66%). Disallowed Products Our Products Preqin Pro Alternative assets data platform Insights+ Weitere Einzelheiten knnen aus unseren Nutzungsbedingungen entnommen werden. The deal-making momentum of 2021 continued through the first half of 2022, and despite the striking slowdown in second-half deal activity, 2022 remained the second most active year on record. [1] The survey was conducted over the period of 15 weeks between October 4, 2021, and January 16, 2022. 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. [5]In 2021, deal activity in Healthcare continued gaining momentum, not only in terms of deal count but also deal value, which reached $340 billion; Healthcare Technology deal counts contributed the most to the sectors dynamism.[6]. A defining characteristic of Asian markets is the way geopolitical and cultural factors inform how business is done. Its our market overview from Bain & Companys 2022 Global Private Equity Report. Unsurprisingly, growth is a leading factor that makes Asia an appealing target for private investment capital. Download the Complimentary 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. 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%. Australia: This material is disseminated in Australia by Morgan Stanley Investment Management (Australia) Pty Limited ACN: 122040037, AFSL No. However, many are cautious of the growing inflation and rate hikes that may impede the unprecedented rate of investment activity. Additionally, the deal-making momentum of 2021 continued through the first half of the year before falling dramatically in the second, weighed down by reduced credit availability and valuation uncertainty. But whether the exit activity will be on par with that of 2021 remains to be seen, and may hinge on looming economic risks. In 2022, mezzanine strategies were most in favor, posting record fundraising totals and more than tripling 2021s haul. Its 2022, and were coming off an extremely busy year in private equity. 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 . A pre-investment ESG diligence includes a materiality scan, ESG performance and benchmark, value-at-stake analytics, and an ESG maturity assessment. 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). 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. Changes is slowest in the Middle East and Africa where 18% of investors have yet to embark on digital revolution at all. Source: Preqin Pro as of September 30, 2022, COPYCAT MODELS ACCELERATING GROWTH Please select an industry from the dropdown list. The decline was most evident in Europe and Asia, while fundraising in North America increased slightly (Exhibit 1). Private debt fundraising continued to grow last year (+2 percent), once again bucking the trend of other private asset classes. On the supply side, the closing of a record number of global megafunds boosted fundraising. Private market valuation refers to round size, as determined by capital invested divided by no of deals. In Asia overall, family businesses and small and medium enterprises make up 85- 90% of companies.13 Many of these businesses operate at low margins due to limited implementation of systems and technology. Natural resources strategies, meanwhile, generated relatively strong performance for a second consecutive year, buoyed by elevated commodity prices. Private Equity & Venture Capital Net IRR from 2002-2017 by Primary Geographic Exposure Source: Preqin Pro as of September 30, 2022 . Because of the deterioration in technology valuations, VC and growth equity returns led the fall, in stark contrast to the last several years. In the early 2000s, Chinas tech industry followed a copycat model, with consumers adopting technology that had proven successful in the U.S. Under-penetration of financial services and modern retail presented an opportunity for China to develop more advanced solutions than what existed in the West. Yet, high-quality assets in segments where there is perceived scarcity value can often achieve premium valuations at exit. While fundraising and investment performance declined, the industrys growth held reasonably steady, with assets under management increasing to $11.7 trillion as of June 30, 2022 (Exhibit 2). [11]Another active year is anticipated[12]as sponsors continue to take advantage of favorable exit conditions and new dynamics such as the rise of Special Purpose Acquisition Companies (SPACs). This document is disseminated in Japan by MSIMJ, Registered No. VC and growth equity both had their second-largest fundraising year on record, cumulatively accounting for more than 50 percent of PE fundraising for the first time. 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. Labor shortages in the wake of the pandemic are undoubtedly playing a role in the overall picture. The Netherlands: MSIM FMIL (Amsterdam Branch), Rembrandt Tower, 11th Floor Amstelplein 1 1096HA, Netherlands. McKinsey research to be published. No investment should be made without proper consideration of the risks and advice from your tax, accounting, legal or other advisors as you deem appropriate. [8] Multiple selections were allowed. 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. More private markets managers are incorporating considerations for ESG factors into their corporate policies, operating procedures, and investment decisions. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. PE returns disappointed, recording the worst year (through September 30) since 2008, and PE ended a five-year run as the top-performing asset class. Private markets fundraising fell 11 percent to $1.2 trillion, as the denominator effect affected some LPs ability to allocate capital. France: MSIM FMIL (Paris Branch), 61 rue de Monceau 75008 Paris, France. We asked the CEO of Moonfare what it takes to get ordinary investors up to speed and investing in private equity with confidence. [2] Private equity managers expect another boom year in 2022. Source: S&P Global Market Intelligence. At $2.5 Bn, MSIM Raises One of the Largest Funds Focused on Single Asset GP-Led Continuation Vehicles. Just 2,141 funds were closed during the year, 1,600 fewer than in 2021 and the fewest of any year since 2013. 2021 was a record year for the PE industry as investment activity surpassed the trillion-dollar mark for the first time. Funds over $5 billion collected a record $445 billion in aggregate, a 51 percent increase over funds of a similar size in 2021. Investor strategy is backed by robust numbers: in 2021, IT accounted for nearly half of total deals completed (46%) and a third of total deal value (37%). Only 13% of respondents anticipate fundraising conditions to deteriorate. 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. Yet, like most private market segments, real estate experienced a downturn in 2022 compared with the record year it followed. 1981121. AUM ascended higher, as it has in every year since the global financial crisis, to $7.6 trillion. This year we also included a question on investors advances on their digitization and automation journey. The mood changed in early summer. Anecdotally, as little as five years ago, many businesses in the region managed trucking logistics via paper on a clipboard. As an investment advisory fee for an IAA or an IMA, the amount of assets subject to the contract multiplied by a certain rate (the upper limit is 2.16% per annum (including tax)) shall be incurred in proportion to the contract period. Investors flocked to the asset class because of its ability to provide stable cashflows, less correlated returns, and a hedge against inflation. 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]. As institutional capital gravitates toward massive generalist private market managers with well-established . January 31st, 2023. 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). 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). But ESGs growing impact on private markets goes beyond just dedicated funds and deals: most funds (of any strategy) now consider ESG risk factors in due diligence, and some explicitly include ESG concepts in their value creation plans. [9]Many PE investors now consider ESG factors when building and managing their portfolio. LPs concentrated commitments among large funds as many investors chose to re-up with known, tested names while forgoing commitments to smaller, newer managers. In office, for example, net absorption turned positive as attendance rates seemingly reached a new equilibrium. This trajectory led to faster adoption; based on data from 1997-2015, unicorn status Chinese Internet startups took an average of four years to reach their $1 billion valuationversus seven years for their U.S. counterparts.

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