Private markets demand cools: bfinance

Investors' appetite for private market strategies appears to be waning as capital raisings fail to keep pace with the frenzied demand in 2023.

According to a new report from bfinance, Manager intelligence and market trends, global private markets raised just US$289 billion in the first quarter of 2024 - which was 26% below the last quarter of 2023. This occurred across the subclasses of private equity and private debt, as well as infrastructure and real estate.

While private equity capital raising declined during the quarter, it is by far the largest private market asset class, accounting for over two thirds of capital raised in 1Q24.

Private equity capital raising was dominated by buyout activity (60% of the total). The surge of secondaries capital raising during 2023 did not flow through to 1Q24, amounting to only US$15 billion or 7% of the total raised during the quarter.

Over the last five years, real estate and private debt recorded the most significant quarterly reductions in capital raising of 40% respectively below the average. Private equity declined by about 20%, while infrastructure grew by 4%.

Infrastructure, which reached a total of US$100 billion in 2023, raised US$34 billion in the first quarter of 2024.

Overall, however, investor appetite for private debt remains elevated. The asset class has raised an average US$34 billion per quarter since 2019. In the four years since, it has averaged US$54 billion per quarter, representing a 60% increase.

Meanwhile, real estate capital raising remained subdued, falling below US$30 billion for the third time in the past six years.

"As for previous quarters, the performance of private market asset classes was heavily influenced by the broader financial market and economic context," the report said.

"In the final quarter of 2023, performance had been supported by growing confidence over the prospect of declining interest rates during 2024. This optimism was not sustained during the first quarter, with increasing concerns that rates would remain elevated for longer than had been expected."

The report highlighted major transactions in the global private market space, as well as managers setting up their own shops.

Most notably, more than 20 senior executives ditched Barings to set up Nomura-backed Corinthia Global Management, a private credit investment management platform and portfolio manager spearheaded by Australian investment veteran Paul Weightman.

Weightman is the former chief executive of Cromwell Property Group and managing director of STARA Real Estate Capital & Advisory.

A US court has reportedly granted Barings an injunction against Corinthia. It will also force Corinthia to return confidential information relating to Barings' clients, employees, and so forth.

New York-based Blue Owl Capital is set to acquire Prima Capital Advisors to create a new real estate debt platform, while CBRE acquired private markets advisor Sera Global.