Key Takeaways
- • Preqin forecasts global alternatives AUM will rise from $16.8trn at end-2023 to $29.2trn by 2029, on track to exceed $30trn by 2030, per its 'Future of Alternatives 2029' report published 18 September 2024.
- • The forecast implies a 9.7% annualised growth rate for 2023-2029, slower than the 10.5% recorded over 2017-2023.
- • Private equity AUM is projected to more than double from $5.8trn to $12trn by 2029 (12.8% annualised), though its IRR is expected to fall from 15.5% to 13.4%.
- • Secondaries are forecast as the fastest-growing segment at 13.1% annualised growth, driven by private wealth demand and portfolio liquidity constraints.
- • Hedge fund AUM is forecast to reach $5.7trn by 2029, growing at only 4.0% annualised, the slowest among major alternative asset classes.
Summary
Preqin, a provider of research and data on alternative assets, has projected that the global alternatives industry will grow from $16.8trn in assets under management at the end of 2023 to $29.2trn by 2029, according to its 'Future of Alternatives 2029' report published on 18 September 2024. The forecast indicates the industry is on track to surpass $30trn by 2030. The projected 9.7% annualised growth rate for 2023-2029 is slightly slower than the 10.5% recorded between 2017 and 2023, reflecting more modest expectations for private equity and venture capital.
Secondaries are expected to be the fastest-growing sector, with an anticipated annual growth rate of 13.1% over 2023-2029. Preqin attributes this to increased private wealth investment and liquidity constraints in investor portfolios, which it says makes the secondaries market favourable to buyers.
Private equity, forecast to remain the largest private capital segment, is projected to grow from $5.8trn to $12trn by 2029, a 12.8% annualised rate, although fundraising challenges may persist until 2027. Preqin estimates private equity could account for roughly 6% of public and private equity markets by end-2024, a share expected to rise as companies stay private longer and listed company counts decline. Private equity IRR is projected to fall from 15.5% in 2017-2023 to 13.4% for 2023-2029.
Private debt AUM is forecast to grow from $1.5trn to $2.6trn by 2029, with average IRR expected to rise from 8.1% to 12.0%, led by distressed debt strategies at a projected 13.4% IRR. Venture capital growth is expected to be driven by AI, with early-stage VC AUM growing at 13.2% annualised, while late-stage VC is forecast to grow more slowly at 8.1%. Private real estate AUM is expected to rise from $1.6trn to $2.7trn, and infrastructure AUM to reach $2.4trn by 2029, supported by the energy transition. Hedge fund AUM is forecast to reach $5.7trn, growing at 4.0% annualised.
Cameron Joyce, global head of research insights at Preqin, said individual investors' access to private markets is expanding, but macroeconomic conditions remain more challenging than in the pre-pandemic era. He noted that while policy rates are likely to decline, geopolitical risks and a shift toward a multipolar world order present both new opportunities and challenges.
Secondaries are expected to be the fastest-growing sector, with an anticipated annual growth rate of 13.1% over 2023-2029. Preqin attributes this to increased private wealth investment and liquidity constraints in investor portfolios, which it says makes the secondaries market favourable to buyers.
Private equity, forecast to remain the largest private capital segment, is projected to grow from $5.8trn to $12trn by 2029, a 12.8% annualised rate, although fundraising challenges may persist until 2027. Preqin estimates private equity could account for roughly 6% of public and private equity markets by end-2024, a share expected to rise as companies stay private longer and listed company counts decline. Private equity IRR is projected to fall from 15.5% in 2017-2023 to 13.4% for 2023-2029.
Private debt AUM is forecast to grow from $1.5trn to $2.6trn by 2029, with average IRR expected to rise from 8.1% to 12.0%, led by distressed debt strategies at a projected 13.4% IRR. Venture capital growth is expected to be driven by AI, with early-stage VC AUM growing at 13.2% annualised, while late-stage VC is forecast to grow more slowly at 8.1%. Private real estate AUM is expected to rise from $1.6trn to $2.7trn, and infrastructure AUM to reach $2.4trn by 2029, supported by the energy transition. Hedge fund AUM is forecast to reach $5.7trn, growing at 4.0% annualised.
Cameron Joyce, global head of research insights at Preqin, said individual investors' access to private markets is expanding, but macroeconomic conditions remain more challenging than in the pre-pandemic era. He noted that while policy rates are likely to decline, geopolitical risks and a shift toward a multipolar world order present both new opportunities and challenges.
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