Today the private equity industry is seen to enter a phase of maturity, following over three decades of strong growth. Now it appears to exhibit classic symptoms of maturity and competitiveness, with firms involved in this sphere tripling globally. It is also facing increased competition from cash-filled corporates.
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| Image source: Pixabay.com |
In early 2017, Forbes had 10 predictions for private equity. Here are some of them:
Relative allocations to private equity continue to rise
An unprecedented number of investors is believed to be in the process of upping their allocation to private equity relative to other asset categories, perhaps as they are drawn to its promise of long-term double-digit returns.
Lower management fees accentuate move of traditional managers into PE
Traditional public market asset managers now have a broad incentive to move into this asset category, where they remain quite well-compensated.
Annual volume in the secondary market creates new record
Over the last five years, the secondary market, where stakes in PE vehicles that are finished fundraising and hold investments can be bought and sold, has become stronger than ever. Commitment levels to secondary funds as well as market volumes have grown steadily, too.
More investors engage in direct investment and bypass managers
Ever-bigger numbers of investors have invested part of their PE allocation directly into deals, sans a third party’s sourcing or management assistance.
Electronic marketplaces grow
The investment category has become more difficult to navigate just by using face-to-face meetings, phone calls, and industry conferences. New venues including online marketplaces and techniques have emerged.
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| Image source: Pixabay.com |
Gregory Lindae is an investment industry expert focusing on venture capital and private equity markets. Read more on this page.
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