Revisiting our overview of US private markets

Private market investments, by their very nature, are long-term endeavours.

Funds typically take years to fully deploy capital, and fund horizons of more than 10 years make measuring private market performance a decades-long view.

With this understanding, day-to-day financial market monitoring is less meaningful for this part of a recipient’s portfolio.

Still…

The past few months have suggested that something a regime change for the markets is underway. High inflation, rising rates, weak (negative) economic growth and over-optimism in 2021 have made the current downturn impossible for private market investors to ignore.

To hedge the broad implications of the macroeconomic environment on alternative assets, we launched our Quantitative outlook: U.S. market overview last year near the height of euphoria. A year later, the climate has clearly changed.

This week we have published our second editioncovering everything from macroeconomics, private equity, venture capital, real assets and debt markets.

Featured in this edition, we believe new investor interest in committing capital to private funds has declined in 2022, despite strong fundraising numbers.

The difference in our analysis is that we measure an allocation momentum metric by looking at new capital deployed in the respective strategies, beyond recycling distributions from 2021 and relative to strategy size.

The results show a decline in buyout funds and a slowdown in the momentum of VC and PE growth vehicles. The table below compares the estimated new deployable capital for equity strategies to the prior year’s assets under management.

Here are some additional quick highlights:

  • We estimate the market capitalization of private equity and venture capital backed companies at over $6 trillion combined.


  • Capital raising for infrastructure funds has already surpassed 2021 figures, with $55.6 billion closed. Additionally, the new deployable capital as a share of the 2021 AUM is 11.8% this year.


  • Lending volumes have fallen significantly as rates rise; new issue yields in the middle market nearly doubled to 8.4%.

This analysis and many more are available in our 70-page report in graphical form.

Download our free research: Quantitative outlook: U.S. market overview

As always, please do not hesitate to contact us with any questions or comments.

About Dwaine Pinson

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