Private Equity: An Optimistic Outlook in 2024 and Beyond

As 2023 unfolds, the macroeconomic environment remains uncertain, casting a shadow over investment prospects. Recent uncertainties marked by geopolitical tensions and high inflation create a complex environment for investors.

In this context, private equity emerges as a favored choice due to its adaptability and resilience against economic challenges.

Oct 19, 2023|موضوع عام- 3 min

PE Optimistic outlook 2024

Navigating Challenging Macroeconomic Waters

The macroeconomic landscape influences financial markets significantly. Interest rate hikes and heightened geopolitical tensions lead to consistent turbulence in public equities, which warrants caution by investors amid fragile confidence. Private equity emerges as a resilient and attractive alternative.

Historical Resilience in Downturns

Historical data shows that private equity offers superior returns during economic downturns, with smaller drawdowns and faster recoveries.1-1Source: Hamilton Lane, Bloomberg (01.2023)

Several key factors contribute to this resilience.

  • Active management allows private companies to adapt swiftly to uncertain environments through nimble changes.

  • Low correlation with public markets provides stability for private equity investments during market turbulence.

  • Long-term focus removes the pressure that public companies face to deliver better results quarterly. Private equity emphasizes long-term value creation, ignoring cyclical downturns. This patient approach yields substantial benefits when economies rebound.

Surge in Secondaries

With the slowdown in mergers and acquisitions and IPOs, secondary transactions are a key tool for quick exits and portfolio diversification. Fund managers use secondaries to meet capital needs and avoid forced sales under unfavorable conditions. The volume of secondary market transactions is expected to reach a record $118 billion in 2023.[1]

1-2Strong slowdown in exit activity. Source: EY (Private Equity Pulse, 2023)

Long-Term Prospect for Private Equity

Private equity remains the investors' top choice. Between 2012 and 2022, private equity assets grew from $3.5 trillion to $12.8 trillion, and are projected to reach $23.3 trillion by 2027.[2] Moreover, the estimated $2.49 trillion in capital available for deployment (dry powder) into private equity this year is twice that of 2018.[3]

Private equity has a promising future. With historical robust growth, consistent outperformance and agile management in changing economic climates, private equity emerges as a resilient asset class. Innovative approaches that leverage artificial intelligence reinforce the outlook for private equity.

Institutions at the Forefront

Institutional investors have already acknowledged the value of private equity investments. They have tripled their portfolio allocations to private equity over the last two decades[4] and nearly 75% plan to allocate more.[5]

In the UK, major pension providers—including Aviva (a multinational insurance company), Legal & General (a multinational financial services and asset management company), Phoenix (the largest long-term savings and retirement business in the UK), and Scottish Widows (an Edinburgh-based life insurance and pensions subsidiary of Lloyds Banking Group)—have allocated 5% of their investments to private equity and early-stage businesses, which could inject up to £50 billion into private equity by 2030, covering two-thirds of the defined contribution pensions market.[6] 

The Bottom Line

The private equity industry is poised to thrive beyond 2023, despite recent challenges. Record dry powder, strong deal flow and renewed investor confidence all point to growth. Institutional commitments reflect a consensus in favor of the asset class, reinforcing its appeal and potential for success.

[1] Lazard

[2] Preqin

[3] SP Global

[4] NYU

[5] BlackRock

[6] investmentweek

About The Family Office

Since 2004, The Family Office has been the wealth manager of choice for more than 200 ultra-high-net worth families and individuals, helping them preserve and growth their wealth through customized solutions in diversified alternatives and more. Schedule a call with our financial experts and learn more about our wealth management process.

Keep reading

من نحن

نبذة عامة فلسفة الاستثمار أعضاء مجلس الإدارة الفريق القيادي مواقعنا
تواصلوا معنا

مكتب المنامة:

الطابق التاسع، برج الزامل شارع الحكومة المنامة 305 مملكة البحرين

bahrain flag+973 1757 8000

مكتب دبي:

أبراج سنترال بارك، مركز دبي المالي العالمي (DIFC) الطابق 21، المكاتب 21-43 دبي، الإمارات العربية المتحدة

uae flag+9714 8343863

مكتب الرياض:

سيغنيتشر سنتر، جناح 102 شارع الأمير تركي بن عبدالعزيز الأول حطّين ، الرياض 13512 - 2110 المملكة العربية السعودية

ksa flag+966 11 250 7720


مستعدون لبدء رحلتكم الاستثمارية؟

اضغطوا هنا للبدء

The Family Office Co. BSC(c) هي شركة استثمارية من الفئة الأولى تخضع لرقابة مصرف البحرين المركزي، ومُرخّصة بسجل تجاري رقم 53871 صادر بتاريخ 21/6/2004، وبرأس مال مُصرّح به ومدفوع قدره 10,000,000 دولار أمريكي. ولا تُقدّم The Family Office Co. BSC(c) منتجاتها وخدماتها سوى إلى "مستثمرين معتمدين" على النحو المحدد من قِبل مصرف البحرين المركزي.

الأسئلة الأكثر تكراراًمبادئ حوكمة الشركاتسياسة الخصوصيةخريطة الموقع