2024 Private Markets Diagnostic Survey
Charting New Routes Across a Dynamic Investment Landscape:
Optimism is growing across asset classes, with concerns around macro factors including recession, rates, and inflation falling, while risks due to geopolitical tensions and elevated valuations were seen to increase. As confidence grows, investors are building allocations into new areas of private markets, driving under-allocations for many LPs—particularly in growing areas such as private credit and infrastructure as well as different access points including secondaries and co-investments.
Liquidity is top of mind for many investors, and fund managers are increasingly exploring liquidity solutions as exits continue to be hindered by lingering macro uncertainty and valuation disconnects between buyers and sellers. LPs are also looking for greater control over their liquidity profiles, building allocations in semi-liquid vehicles across asset classes, as well as increasing engagement with the secondary market to explore liquidity options.
The industry continues to evolve, adapting to the new investing environment, as well as new technologies. AI was again highlighted as the top driver of industry evolution, and with higher rates and elevated valuations, GPs are focused on growing top-line revenue to build value at their portfolio investments. Managers are also expanding their product offerings and fortifying their balance sheets with outside capital, as industry consolidation becomes a more common theme and LPs continue to focus on investing capital with fewer managers.
As fundraising dynamics remain in flux, LPs are scrutinizing fund terms and fees more closely while GPs are emphasizing their sector expertise and differentiated sourcing. Larger LPs are focused on co-investment opportunities, customized solutions, and sustainability—though more than half of investors in the Americas lack sustainable investment goals. GPs, on the other hand, show strong adoption of sustainability, particularly as they seek out LPs in EMEA and Asia where sustainable investing is in greater focus.
Sentiment is slowly shifting from cautious to courageous, with both investors and fund managers increasingly willing to explore new strategies and investment approaches. Entering this new terrain, investors will need to remain vigilant and ensure they have the tools, resources, and expertise to forge ahead.
Private market investors are more optimistic about investment opportunities than they were last year, as inflation has moderated and valuations have begun to adjust. While concerns about recession risk and inflation have tempered, greater focus is being placed on geopolitical conflicts and still-elevated valuations.
Limited Partners (LPs) continue to build toward their private credit and infrastructure targets as private market allocations become more diverse, and they are increasing deployment levels but focusing on fewer relationships. The balance of LPs remains under-allocated across private market strategies, with challenges around over-allocations to private equity largely centered with LPs in the Americas.
General Partners (GPs) are focused on driving revenue growth at their portfolio companies and looking towards interim liquidity solutions, including continuation vehicles and dividend recaps, to drive liquidity for LPs. Buyer/seller valuation gaps are hindering transaction activity on both the acquisition and disposition sides, with macro uncertainty also constraining exits.
The private markets industry continues to evolve, with GPs expanding their offerings and nearly a third leveraging or evaluating the use of an equity stake sale to capitalize the management company. LPs are moving beyond the typical drawdown structure, with interest in semi-liquid vehicles expanding to include equity strategies.
Sustainability remains a key focus for larger LPs and those outside the Americas, while more than 50% of LPs in the Americas do not have sustainable investment goals. GPs, focused on raising capital globally, broadly report greater progress in achieving sustainable investing goals.
Methodology & Respondents
Our findings are from 235 institutions and fund managers globally who provided insights from a diverse set of perspectives, across a wide range of limited partner types including: asset/wealth managers, official institutions, public pensions or retirement systems, family offices, endowments, foundations, insurance, private pensions and general partners.
