Evening Brief – 03.08.24
Private Over Public
Institutional investors are confident that their reliance on private markets protects them against short-term volatility and economic instability, according to a recent survey.
About 90% of respondents expect private markets to continue to outperform public markets, with roughly 66% intending to increase their exposure this year, noted global private markets investment managers Adams Street Partners in their annual Global Survey.
Respondents choose private market managers with scale and a platform that spans many strategies, notably in technology, healthcare, and other high-growth industries. Investors value extensive sector experience, advanced digital analytics, scale for large transactions, and a focus on value creation rather than debt leveraging in private market funds.
Rising interest rates and inflation are viewed as the most significant challenges by approximately 39% of respondents, down from 55% in the previous year’s survey. There is also a growing consensus that inflation has peaked, with 46% confident that it would fall further by the end of 2024.
Meanwhile, investors are concerned about geopolitical risk, with 55% of respondents seeing U.S. politics as the most serious threat to global economic stability and growth, followed by the Israel-Hamas war (44%), and U.S. and China tensions (43%).
Increased interest in the secondary market indicates increased heightened interest in a variety of asset classes given liquidity concerns in the M&A and IPO markets. According to the survey, 81% and 88% of investors intend to invest up to 20% of their private market assets in private credit and secondaries, respectively.
Technology and healthcare remain appealing investment options, with AI viewed as a major market accelerator. Financial services are also gaining popularity. Interest in blockchain technologies is also growing, with the majority planning to invest in digital currency or blockchain-related opportunities.
The survey included 100 institutional investors in the U.S., Europe, and Asia Pacific.