Private Equity Landscape Anticipates a Brighter 2024 with Technological Advancement in Investments
The private equity sector is gearing up for a promising year in 2024, demonstrating resilience and a positive outlook despite the evolving market conditions, as reported by the S&P Global Market Intelligence 2024 Private Equity and Venture Capital Outlook. The industry is notably more confident about the upcoming year’s deal activities, with a significant 60% of private equity executives expecting an uptick compared to the previous year’s 34%.
“The latest survey highlights a wave of optimism among general partners and investors who are eager to ramp up deal activities and capitalize on increasing valuations to clear their investment backlogs and provide returns to limited partners,” said Thomas Mercieca, associate director and lead author of the report. “The interest in private credit is on the rise, with 61% of limited partners aiming to boost their asset allocation in this domain in 2024. Despite ongoing macroeconomic challenges, the sector remains flexible and on track for growth throughout the year.”
Notable Insights from the 2024 Outlook:
- Smaller and mid-tier private equity firms are more hopeful about deal activity resurgence in 2024 compared to larger counterparts.
- A majority of limited partners investing in private markets indicate plans to augment their private credit investments in 2024.
- While personal networks and referrals are currently predominant in sourcing investment opportunities, 54% of investment professionals from general partnerships predict that AI will soon influence deal sourcing and target selection.
- Usage of private credit for deal financing has expanded among private equity general partners, especially within larger firms, as an alternative to traditional bank loans.
- The fundraising climate is perceived to have reached its nadir, with only 15% of general partners expecting fundraising conditions to worsen in 2024, a stark contrast to the 45% at the outset of 2023. However, venture capital firms continue to express concerns regarding potential reductions in limited partners’ allocations.
- While 68% of venture capital professionals forecast an improvement in deal activity for 2024, a notable 28% anticipate conditions will remain consistent with 2023.
The survey conducted by S&P Global Market Intelligence encompassed 370 respondents globally from the private equity, venture capital, and limited partner sectors across regions including North America, Latin America, Asia Pacific, the Middle East, and Africa. The survey, which ran from November 16, 2023, to January 12, 2024, delved into topics such as deal activity, strategic shifts, market and firm-level challenges, considerations of sustainability, and adoption of technology.
Requests for the 2024 Private Equity and Venture Capital Outlook can be directed to the S&P Global Market Intelligence team.
The viewpoints, analyses, and credit-related assessments by S&P Global Market Intelligence represent opinions as of their publication date and should not be construed as recommendations or as factual statements regarding securities purchase or investment decisions.
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