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. Most of the current fund commitment decisions were made last year, which was impacted by the denominator effect as public markets . New government policies that provide incentives for certain ESG investmentsmost notably the US Inflation Reduction Act of 2022are likely to strengthen this correlation further. Download Alternatives in 2022 | Preqin 2022 will prove to be the best year yet for ESG-focused fundraising, with $24 billion raised through the first half of the year. Markets climbed higher still, awash with central-bank-induced liquidity. 4 Source: BCG, Decoding the Chinese Internet Sept 2017 www.preqin.com, [4] S&P Capital IQ Pro Platform (as of 27/01/2022). Political upheaval (26 %) and the high speed of technological changes (20%) round off the top five risk factors. However, top-performing Asian private equity funds show historical performance that often exceeds top-performing North American and European funds.2 This outperformance has generally been delivered with lower levels of underlying leverage, as company-level debt is less readily available and/or less attractively priced in Asia versus Western markets, and private equity subscription lines of credit are less commonly used by funds in Asia.3 General partners (GPs) in the region that are able to identify the right market opportunities and execute accordingly have shown that they can indeed deliver that much desired risk premium. [1]The study centered mostly on General Partners (GP) expectations around deal-making, fundraising, investment strategy, threats to the growth of portfolio companies, and the approach to Environmental, Social and Governance (ESG) factors. 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. Anecdotally, as little as five years ago, many businesses in the region managed trucking logistics via paper on a clipboard. In the first half of 2022, central banks fought roaring inflation by sharply raising interest rates, and public market valuations cratered. 2 Preqin, data as of September 2022. 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. (As of 13/01/2022). Core-plus and value-add strategies are now investing in new asset categories and infrastructure service providers as GPs seek to accommodate the return expectations of a new class of infrastructure investor. Bain's Global Private Equity Report examines the industrys strengths, its challenges, and the evolutionary path that lies ahead. The mood changed in early summer. [2] Private equity managers expect another boom year in 2022. McKinseys Private Markets Annual Review: 2017 to 2022. Investors looking to Asia usually ask, Can I expect a risk premium? In short, yesat least based on MSIMs analysis. For those who are not professional investors, this document is provided in relation to Morgan Stanley Investment Management (Japan) Co., Ltd. ("MSIMJ")s business with respect to discretionary investment management agreements ("IMA") and investment advisory agreements ("IAA This is not for the purpose of a recommendation or solicitation of transactions or offers any particular financial instruments. FT Adviser. Welcome to Preqin's first ever Global Alternatives Report dedicated solely to Venture Capital. Another prevailing theme for the upcoming months to grow in significance will be digitalization. Information regarding expected market returns and market outlooks is based on the research, analysis, and opinions of the investment team of the Private Markets Solutions Team. Its our market overview from Bain & Companys 2022 Global Private Equity Report. Insights Blog: Five Findings from COP27 with Vikram Raju. McKinsey research to be published. 13 Russell Reynolds, Transitioning to the Next Generation: Leadership succession within family businesses in Southeast Asia, November 2021. The 2022 Global Private Equity Report: Market Overview - Bain For those that can identify and partner with such private equity managers, there exists a promising opportunity for outperformance in the region. MSIMJ exercises the delegated authorities based on investment decisions of MSIMJ, and the client shall not make individual instructions. In total, 2,543 funds held a final close, a 14% increase on the previous years tally. Trial by fire: Indian PE ecosystem resilient in a globally challenging year. Beyond China (which is currently facing its own challenges), leapfrog potential exists in other parts of Asia. Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Going into 2022, PE investors remain largely bullish on the investment activity outlook. (As of 31/01/2022). Source: Preqin Pro as of September 30, 2022, COPYCAT MODELS ACCELERATING GROWTH Private debt fundraising continued to grow last year (+2 percent), once again bucking the trend of other private asset classes. Global alternatives AUM forecast to double by 2026, topping $23 PDF Private Equity Market Update - CAIA Singapore: This material is disseminated by Morgan Stanley Investment Management Company and should not be considered to be the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor under section 304 of the Securities and Futures Act, Chapter 289 of Singapore ("SFA"); (ii) to a "relevant person" (which includes an accredited investor) pursuant to section 305 of the SFA, and such distribution is in accordance with the conditions specified in section 305 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. The investment strategies described in the preceding pages may not be suitable for the recipients specific circumstances; accordingly, you should consult your own tax, legal or other advisors, both at the outset of any transaction and on an ongoing basis, to determine such suitability. 22% of respondents say their firms are exploring digital technologies while 7% say their firms are close to making the final decision. Signs of a flight to quality, or at least to better-known managers, emerged. The median VC and growth funds lost 6.3 and 7.3 percent, respectively, through the first three quarters of 2022, while the median buyout fund earned 0.9 percent. Banks began to pull back, unwilling or unable to lend. 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. Open-end funds in the US grew NAV by 24 percent, with contributions exceeding distributions for the first time in two years. As of the second quarter of 2022, dry powder exceeded $3 trillion, reflecting an 8.4 percent year-over-year increase and marking the eighth consecutive year of growth. Here's what it means for private investors. Die auf dieser Website beschriebenen Dienstleistungen sind unter Umstnden nicht in allen Rechtsgebieten oder fr alle Kunden verfgbar. Almost 17% of PE professionals from that region anticipate the investment landscape will deteriorate in 2022. AUM ascended higher, as it has in every year since the global financial crisis, to $7.6 trillion. Increasing representation across all levels will require managers to take fresh approaches to hiring, retention, and promotion. Market Intelligence Infrastructure and natural resources fundraising rose to an all-time high of $158 billion, benefiting from the closing of a record five funds of more than $10 billion. As institutional capital gravitates toward massive generalist private market managers with well-established . 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). 1981121. equity, real assets, and debt capital markets. (As of 7/10/2021). Direct lending fundraising declined from 2021, but only marginally, raising over $100 billion for the second consecutive year. Fundraising hit a new record in 2021 with established fund managers riding the wave. Outside the EU, MSIM materials are issued by Morgan Stanley Investment Management Limited (MSIM Ltd) is authorised and regulated by the Financial Conduct Authority. In China, state-owned enterprises make up approximately 40% of GDP.12 These companies have traditionally been less nimble and commercially focused than their private counterparts, with many straightforward areas for operational improvement. Concerns over start-ups' high burn rate and limited exit options caused by a global equity sell-off have extended funds' holding periods and slowed capital distribution. Natural resources strategies, meanwhile, generated relatively strong performance for a second consecutive year, buoyed by elevated commodity prices. Add-on deals, which tend to be smaller, continued to gain share as a percentage of total deals. Please read and agree to the Privacy Policy. Screening results include only M&A Exits not IPOs. The 2022 Global Private Equity Report: Market Overview 00:00 08:58 Today on Dry Powder, we'll cover the essential indicators of 2021, which can inform your strategy in 2022 and beyond. Global Private Equity Report Web3 Remains Highly Relevant for Private Equity Despite the hype and turmoil in the crypto world, web3 technology is here to stay. High inflation persisted throughout most of 2022, prompting central banks around the world to increase interest rates at a historic pace. Across our clients, we see ESG becoming a competitive differentiator and driver of returns. IT and Healthcare sectors will continue to be in high demand, with ESG considerations taking an increasingly central role in the investment decision process and beyond. The client shall delegate to MSIMJ the authorities necessary for making investment. [13]In terms of exit methods, trade sale will still be the most preferable route, attracting a third of respondents (32%) versus a quarter last year. North America registered a 111% increase in aggregate deal value on the previous year and accounted for half of the total transaction value ($534 billion). Conversely, dollars raised by sub$5 billion funds decreased by 28 percent. VC fundraising also saw an increased level of activity, with an aggregate capital raised up 23% on the previous year. Morgan Stanley Investment Management (MSIM) views private equity in Asia as a potential bright spot for investors that offers the opportunity for outperformance, particularly at the current juncture. France-based fund managers are leaders in ESG investingLONDON, April 27, 2023 (GLOBE NEWSWIRE) -- Preqin, the global leader in alternative assets data, tools, and insights, published its Private . Registered Office: Beethovenstrasse 33, 8002 Zurich, Switzerland. One recent survey indicates that nearly three-quarters of LPs would consider eliminating a manager from consideration if it was unable to provide acceptable standards of ESG-related disclosures.7Global Private Equity Barometer, Coller Capital, Winter 202223. Since these charges and expenses are different depending on a contract and other factors, MSIMJ cannot present the rates, upper limits, etc. European investors appear to have the most confidence about the industrys outlook, with 98% predicting that deal-making activity will either improve or remain the same. Like the strategies for other asset classes, infrastructure and NR strategies were affected by macroeconomic challenges. The market environment in the next few years will present further dislocation and opportunity for fundamental value creation. Compared with a heady prior decade of robust growth, 2022 was a subdued year in the private markets. Eine monatliche Publikation mit den neuesten Einblicken des Global Multi-Asset Teams zum Wirtschafts- und Marktumfeld und zur optimalen Portfoliopositionierung. Sustainability-related deals (the "E") increased by 7 percent to nearly $200 billion, proving resistant to the deal-making headwinds that affected other asset classes. At $2.5 Bn, MSIM Raises One of the Largest Funds Focused on Single Asset GP-Led Continuation Vehicles. 11 Bain & Company, "Asia-Pacific Private Equity Report 2022". Still, private markets outperformed public markets on the way down, whether due to truly more resilient portfolios, a lag in timing, or manager discretion over their marks (private markets tend to mark up less quickly during ascending markets and mark down less quickly in falling markets). Tighter financial conditions and general risk aversion continued to slow activity across the venture capital industry in the fourth quarter of 2022. FMIL is regulated by the Central Bank of Ireland and is incorporated in Ireland as a private company limited by shares with company registration number 616661 and has its registered address at The Observatory, 7-11 Sir John Rogersons Quay, Dublin 2, D02 VC42, Ireland. The continued momentum in 2022 was understandable, as debts current yield and senior position in the capital stack have long made it a haven in volatile periods. 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. Please select an industry from the dropdown list. Since 2017, fundraising in Asia has declined 16 percent per year, driven primarily by reduced investment in China. As overall GDP growth slows, efficiency improvement will become increasingly more important. Number of France-based institutions investing in private equity grows Investors flocked to the asset class because of its ability to provide stable cashflows, less correlated returns, and a hedge against inflation. An example of this are the shares of Indian banks and non-bank finance companies (NBFCs) where the highest quality banks/NBFCs trade at Price/Book multiples 3-7x that of the market median.10. Private market valuation refers to round size, as determined by capital invested divided by no of deals. The 2022 Preqin Global Alternatives Reports are the most complete and in-depth annual reviews of private equity, venture capital, private . Both sectors attractiveness has increased from last year (30% and 26% respectively). After more than doubling year over year in 2021, multifamily deal volume fell 29 percent in 2022, accounting for nearly half of the asset classs overall decline in deal activity. 2022 Diversity, Equity, and Inclusion Report. ITS NOT JUST THE PRICE More than half of respondents (58%) highlighted it as the top risk factor to their portfolio. Indirect charges also may be incurred, such as brokerage commissions for incorporated securities. Today on Dry Powder, well cover the essential indicators of 2021, which can inform your strategy in 2022 and beyond. In 2022, 1,069 more investors committed to the United Nations Principles for Responsible Investment (PRI)3A United Nations-supported network of investors promoting sustainable investment., and a further 88 asset owners became PRI signatories, bringing the total to 681.4Principles for Responsible Investment, annual report, 2022. By just about any measure, private equity set a remarkable new standard in 2021. A strengthening dollar accounted for a material portion of the dollar-based decline in fundraising in non-US markets. This has the knock-on effect of weakening fundraising, and we . This has played out among Korean tech companies where early-stage investments are limited to local VCs, keeping valuations modest. Expanding capitalization (cap) rates across sectors, which represent the multiple investors are willing to pay for net operating income (NOI), drove performance lower. Private markets fundraising fell 11 percent to $1.2 trillion, as the denominator effect affected some LPs ability to allocate capital. Many attributes of businesses located in Asia are well-suited to operational improvements that can both further growth and increase margins. Registered in England. 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%). And while infrastructure and NR fund performance declined somewhat from 2021, these funds were the top-performing private markets asset classes in 2022. Automating these manual, inefficient processes are potential easy-wins to improve efficiency. a new high. The pattern in 2021 and 2022 was no different: despite rising US Treasury (UST) rates, cap rates decreased and values rose. 44% of respondents indicated they are planning to focus on improving ESG related factors in their portfolio companies this year, and 32% are seeking investments with a good ESG track record, up from 29% in 2021. Number of France-based institutions investing in private equity grows Eine umfassende Bewertung wichtiger Trends, die das globale Anlagerisikoumfeld und unsere Portfolioallokationen beeinflussen. Tech-focused buyout funds performed worse than other buyout funds for the second consecutive year, and venture capital (VC) underperformed buyout strategies for the first time since 2017. Yet, high-quality assets in segments where there is perceived scarcity value can often achieve premium valuations at exit. Vikram Raju discusses five key findings from COP27. Under-penetration of financial services and modern retail presented an opportunity for China to develop more advanced solutions than what existed in the West. Funds over $5 billion collected a record $445 billion in aggregate, a 51 percent increase over funds of a similar size in 2021. Beyond robust GDP growth, under-penetration in many sectors creates opportunity for accelerated growth. Finally, macroeconomic forces, including higher energy prices and geopolitical conflict, have strengthened long-term investor interest in alternative energy sources and overall energy independence. It conducted a debut survey of firms in this sector, gathering professional insights and opinions on how they are likely to fare in 2022 in terms of fundraising, dry powder, regulations, ESG considerations, private equity operations, investing areas, strategies, outsourcing, valuations and exits. Venture capital is gearing up for a cold spell as portfolio companies' growth and fundraising are slowing. Critical in this endeavor is the identification of private equity managers which possess the appropriate skills and requisite experience to manage the regions unique challenges. The five-year horizon internal rate of return (IRR) of 19.2% trails global private equity (20.8%), but the one-year return of 24.8% is some way above the 14.4% for private equity globally. For more from Dry Powder on the report, you can listen to Three Essential Trends . (As of 16/11/2021). 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. 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 . Ethnic, racial, and gender representation also remains imbalanced in senior positions and investing roles, suggesting that firms broadly continue to miss talent opportunities. Even in 2020, when activity stalled briefly during the early months of the COVID-19 pandemic, private markets hummed again in the second half. 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. In a year when other private classes fell back to earth somewhat, private debt set a new fundraising record, led by several megafund closes. Institutional investors sought out the asset class for various features that are attractive in times of market volatility: current yield, floating rates, and relative insulation (via its senior position in the capital stack) from declining valuations. Stay ahead in a rapidly changing world. 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%). But whether the exit activity will be on par with that of 2021 remains to be seen, and may hinge on looming economic risks. Japan: For professional investors, this document is circulated or distributed for informational purposes only. Although PE firms have been slow to join the digital technology revolution, many are catching up and implementing advanced data and analytics tools to identify new growth opportunities and remain competitive. This paper covers a few of the drivers of outperformance in Asiaaccelerated and leapfrog growth, valuation arbitrage and efficiency improvementand why these observed characteristics make the Asian market particularly attractive. More private markets managers are incorporating considerations for ESG factors into their corporate policies, operating procedures, and investment decisions. Alternative investment funds are often unregulated, are not subject to the same regulatory requirements as mutual funds, and are not required to provide periodic pricing or valuation information to investors. 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). MSIM, the asset management division of Morgan Stanley (NYSE: MS), and its affiliates have arrangements in place to market each others products and services. This is prepared for sophisticated investors who are capable of understanding the risks associated with the investments described herein and may not be appropriate for the recipient. 37 How are increasing LP sophistication and diversification shaping the industry and the types of services GPs need to offer? In the EU, MSIM and Eaton Vance materials are issued by MSIM Fund Management (Ireland) Limited (FMIL). 2022 Global Private Equity Outlook | S&P Global Market Intelligence In subsequent papers, the team will go into further depth on the region, covering topics such as the opportunity for venture capital in India and the current state of private equity in China. The Covid-19 pandemic re-emphasized the importance of localized operations, as closed borders made it impossible for non-local managers to undertake transactions. On aggregate those funds raised $845.5 billion capital across various strategies, with growth capital funds seeing the largest upsurge. However, many are cautious of the growing inflation and rate hikes that may impede the unprecedented rate of investment activity. In total we received 357 responses from PE and VC investors globally. Vintage years beyond 2017 have been excluded as performance is less mature and may be too early to tell. Geopolitical risks, currency risks, and exits/liquidity are important considerations for investors contemplating an allocation to Asian private equity, and adequately addressing these risks are undoubtedly key to achieving positive performance in Asian markets. Buyout deal value and exits set all-time records for the industry.

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