Global alternatives markets on course to exceed $30tn by 2030 — Preqin forecasts

Private equity market AUM set to more than double, while secondaries (13.1%) predicted to see strongest annualized growth in forecast period of 2023 to 2029

LONDON, Sept. 18, 2024 (GLOBE NEWSWIRE) - Preqin, the global leader in alternative assets data, tools, and insights, today published its Future of Alternatives 2029 report. Preqin forecasts the global alternatives industry to reach $29.2tn in assets under management (AUM) by 2029, from $16.8tn at the end of 2023. While not part of the official report forecasts, the analysis predicts the industry is on course to exceed $30tn in AUM by 2030. This signifies an annualized growth rate of 9.7% in the forecast period, 2023-end to 2029, which represents a slowdown from 10.5% during the 2017–2023 period due to softer expectations for the private equity and venture capital markets.

Private wealth and weak exit markets are expected to drive secondaries to an annualized growth rate of 13.1%, with secondaries forecast to be the fastest growing area of alternatives from 2023-end to 2029. Currently, the secondaries market remains a buyer's market, as investors' portfolios face liquidity constraints. Preqin anticipates ongoing demand for secondaries strategies from the private wealth channel, as they offer inherent advantages for investors that are new to private markets.

The Future of Alternatives report series forecasts the size and growth of the global alternatives industry based on Preqin's Research Insights team's data-driven predictive models and analysis. The report covers all alternative asset classes, including by strategy, across major global regions.

Cameron Joyce, Global Head of Research Insights at Preqin, says, “Global alternatives markets continue to evolve rapidly, especially as individual investors' access opens up, as the private wealth channel's growth continues to gather pace. While policy rates are expected to decline, macroeconomic conditions are likely to remain more challenging than during the pre-pandemic era, and our forecast of slower industry growth reflects that. Investors are navigating evolving geopolitical risks as we move towards a multipolar world order – which presents a new set of investment opportunities and risks.”

Private equity market to more than double while private debt performance is forecast to improve

Private equity is predicted to remain the largest private capital asset class, with Preqin forecasting it is on course to more than double in AUM from 2023-end to 2029, from $5.8tn to $12.0tn, at an annualized growth rate of 12.8%. Notably, Preqin analysts believe the asset class should represent approximately 6.0% of public and private equity markets by the end of 2024. This percentage is expected to increase over time, owing to a combination of factors, including private companies staying private for longer, take-privates, lackluster IPO markets, and an overall decline in the number of listed companies over time. Fundraising is expected to remain challenging, but growth is forecast to pick up from 2027, supported by increasing interest from private wealth investors who currently have a relatively low exposure to private equity. However, performance over the forecast period is expected to be softer than it has been, with global private equity projected to have a lower internal rate of return (IRR) compared with 2017–2023, falling to 13.4% from 15.5%.

Meanwhile, private debt's performance is forecast to improve, as led by distressed debt. Preqin believes the 2017–2023 average IRR of 8.1% should rise to 12.0% in 2023–2029F for private debt overall, with distressed debt to average 13.4% for the period. However, the difference in performance between private debt overall and distressed debt is expected to narrow, as the global economy moves towards a relatively more settled credit environment. Overall, private debt AUM is forecast to rise from $1.5tn at 2023-end to $2.6tn by 2029.

Additional key findings include: 

• Venture capital: Artificial intelligence is expected to be one of the factors buoying early-stage venture capital with annualized AUM growth at 13.2%, followed by venture (general) at 11.1%, from end-2023 to 2029F. Late stage venture capital (8.1% annualized AUM growth) is forecast to be weighed down by the challenging exit environment and asset valuations, as well as greater regulatory scrutiny of mergers and acquisitions.
   
• Real Estate: Global private real estate AUM is forecast to continue its steady growth to $2.7tn by 2029, following 2023's dip ($1.6tn). Preqin's models project that value-added will see the largest IRR increase of any real estate strategy for the forecast period compared with 2020–2023, increasing by 2.1ppts to 9.6%.
   
• Infrastructure: Global unlisted infrastructure AUM is forecast to reach $2.4tn in 2029, as the energy transition lifts fundraising and deals from 2027 onwards. But stronger fundraising in the second half of the forecast period (2027F–2029F), alongside higher performance compared to 2017–2023, means AUM should continue to gain ground and reach 88.0% of that in real estate by the end of 2029F.
   
• Hedge funds: Global hedge funds AUM is forecast to surpass $5.7tn by 2029, but outflows are predicted to impact performance-based growth. Hedge funds have the slowest forecast annualized growth rate over the 2023-end to 2029 period for all alternative asset classes, at 4.0%.

Note to editors:

Preqin's Future of Alternatives 2029 report series leverages a proprietary model built by the Preqin data science team, further information is available upon request.

If you would like more information or would like to speak with the report author, please contact Oliver Keyser at oliver.keyser@preqin.com

About Preqin

Preqin, the Home of Alternatives™, empowers financial professionals who invest in or allocate to alternatives with essential data and insight to make confident decisions. It supports them throughout the entire investment lifecycle with critical information and leading analytics solutions. The company has pioneered rigorous methods of collecting private data for over 20 years, enabling more than 200,000 professionals globally to streamline how they raise capital, source deals and investments, understand performance, and stay informed. For more information visit www.preqin.com.