Key Takeaways
- • Preqin forecasts global alternatives AUM to exceed US$30 trillion by 2030, up from US$16.8 trillion at end-2023, implying a 9.7% annualized growth rate through 2029.
- • The projected 9.7% growth rate is a slowdown from 10.5% annualized over 2017–2023, reflecting softer expectations for private equity and venture capital markets.
- • Secondaries are forecast to be the fastest-growing alternatives segment at a 13.1% annualized rate, driven by private wealth demand and weak exit markets.
- • Private equity remains the largest private capital asset class, forecast to grow from US$5.8 trillion to US$12.0 trillion by 2029 (12.8% annualized).
- • Private equity IRR is projected to fall to 13.4% from 15.5% in 2017–2023, while private debt returns are forecast to rise to 12.0% from 8.1%, led by distressed debt at 13.4%.
Summary
The global alternatives industry is poised to exceed US$30 trillion in assets under management by 2030, up from US$16.8 trillion at the end of 2023, according to a new report from Preqin, the London-based alternative assets data and research provider. Preqin projects annualized growth of 9.7% over the end-2023 to 2029 period, a deceleration from 10.5% during 2017–2023, which it attributes to softer expectations for the private equity and venture capital markets.
Preqin's Future of Alternatives 2029 report expects secondaries to be the fastest-growing area of alternatives, with a forecast annualized growth rate of 13.1%. Private wealth demand and weak exit markets are cited as key drivers. The secondaries market currently remains a buyer's market as portfolio liquidity constraints persist, and Preqin anticipates continued demand from private wealth investors, for whom secondaries offer inherent advantages as they enter private markets.
Cameron Joyce, global head of research insights at Preqin, said the growth of the private wealth channel is accelerating access to alternatives for individual investors. He noted that while policy rates are expected to decline, macroeconomic conditions are likely to remain more challenging than in the pre-pandemic era, and that evolving geopolitical risks in a multipolar world order present both new opportunities and risks.
Private equity is forecast to remain the largest private capital asset class, more than doubling in AUM from US$5.8 trillion at end-2023 to US$12.0 trillion in 2029, a 12.8% annualized rate. Preqin expects the asset class to represent approximately 6.0% of public and private capital markets by end-2024, rising over time as companies stay private longer, take-privates increase, and listed company counts decline. Fundraising is expected to remain challenging before picking up from 2027, supported by private wealth investors with relatively low current private equity exposure. Projected private equity IRR of 13.4% over 2023–2029 would fall from 15.5% in 2017–2023.
Private debt performance is forecast to improve, with an average IRR of 12.0% in 2023–2029 versus 8.1% in 2017–2023, led by distressed debt at an average of 13.4%. The gap between private debt overall and distressed debt is expected to narrow as credit conditions settle. Private debt AUM is forecast to rise from US$1.5 trillion at end-2023 to US$2.6 trillion by 2029, per Preqin.
Preqin's Future of Alternatives 2029 report expects secondaries to be the fastest-growing area of alternatives, with a forecast annualized growth rate of 13.1%. Private wealth demand and weak exit markets are cited as key drivers. The secondaries market currently remains a buyer's market as portfolio liquidity constraints persist, and Preqin anticipates continued demand from private wealth investors, for whom secondaries offer inherent advantages as they enter private markets.
Cameron Joyce, global head of research insights at Preqin, said the growth of the private wealth channel is accelerating access to alternatives for individual investors. He noted that while policy rates are expected to decline, macroeconomic conditions are likely to remain more challenging than in the pre-pandemic era, and that evolving geopolitical risks in a multipolar world order present both new opportunities and risks.
Private equity is forecast to remain the largest private capital asset class, more than doubling in AUM from US$5.8 trillion at end-2023 to US$12.0 trillion in 2029, a 12.8% annualized rate. Preqin expects the asset class to represent approximately 6.0% of public and private capital markets by end-2024, rising over time as companies stay private longer, take-privates increase, and listed company counts decline. Fundraising is expected to remain challenging before picking up from 2027, supported by private wealth investors with relatively low current private equity exposure. Projected private equity IRR of 13.4% over 2023–2029 would fall from 15.5% in 2017–2023.
Private debt performance is forecast to improve, with an average IRR of 12.0% in 2023–2029 versus 8.1% in 2017–2023, led by distressed debt at an average of 13.4%. The gap between private debt overall and distressed debt is expected to narrow as credit conditions settle. Private debt AUM is forecast to rise from US$1.5 trillion at end-2023 to US$2.6 trillion by 2029, per Preqin.
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