- More than 70% of respondents globally intend to increase their
allocations to private equity this year
- In private credit, more than half of respondents globally plan
to add to their holdings in 2023
- Sourcing is the top priority for investors when selecting a
private markets manager
BlackRock Alternatives today released the results of its
inaugural Global Private Markets Survey, the first survey it
conducted to capture the views of capital allocators representing
US$15 trillion in total assets under management – with US$3.2
trillion invested in private markets. This represents approximately
a quarter of the global private market’s institutional investment
landscape.
Edwin Conway, Global Head of BlackRock Alternatives,
said, “Over the past 20 years, we have seen private markets
grow from a niche category to the cornerstone of many portfolios.
The results of our inaugural Global Private Markets Survey show
sophisticated investors have moved on from the 60/40 allocation
model and that private assets will continue to grow as a percentage
of global portfolios. Despite broad market declines last year,
recession concerns and recent market turmoil, we see that
short-term uncertainty is not derailing the growth of private
markets.”
Income generation key
Income generation emerges as the most important factor driving
private markets investments, with 82% of respondents identifying it
as the key factor in their allocation considerations. Capital
appreciation is the next highest priority driving the decision to
allocate to private markets, according to 58% of respondents.
Appetite for private credit increasing
The search for income has translated into significant investor
interest in private credit, particularly infrastructure and real
estate debt, as well as distressed strategies. More than half of
respondents globally plan to add to their private credit holdings.
In the U.S. and Canada, more than a third of investors expect to
“substantially increase” their private credit allocation in
2023.
Private equity in highest demand
Globally, more than 70% of investors intend to increase their
allocations to private equity this year, though it remains to be
seen if recent upheavals have changed that outlook. More than half
of all investors based in the U.S. and Canada plan to increase
their allocations across asset classes this year, while in the
Asia-Pacific region more than two-thirds of respondents plan to add
to their private credit allocations. In EMEA, 71% plan to increase
their private equity allocations.
Opportunities within asset classes
As investors increase their private markets allocations, they
can choose from a wide selection of assets with different
characteristics. For example, in private equity, more than half of
respondents in each region believe mature companies are the most
attractive opportunity for returns, followed by venture capital,
secondaries and buyouts, respectively. Looking at private credit,
capital allocators see the biggest opportunities in infrastructure
or real estate debt, driven by expected tailwinds from recent U.S.
infrastructure legislation and what some see as a temporary
dislocation in property values as a result of higher interest
rates. Distressed strategies are a close second.
In infrastructure, respondents identify emerging markets as the
greatest opportunity, with transportation and renewables closely
following.
Barriers remain
While private markets continue to expand, and investors plan to
allocate more, there are still factors hindering further
investments. Though respondents shared their views prior to the
recent bank failures, the survey reveals that they see liquidity as
the single biggest barrier to investing in private assets.
Respondents differ in just how big an issue they see liquidity
being, with more than half of all pensions naming illiquidity as
their main obstacle to private markets, while only 40% of insurers
agree. After liquidity, barriers to private markets include getting
internal stakeholder buy-in and limited organizational expertise or
comfort levels with the asset class, respectively.
Asset Allocation Insights:
- Respondents’ average portfolio allocation to private markets is
24%
- 72% of respondents worldwide plan to increase their private
equity allocations
- More than half of respondents plan to add to their private
credit holdings
- In private credit, infrastructure and real estate debt, as well
as distressed strategies, are seen as the biggest
opportunities
- More than half of all U.S. and Canada investors plan to
increase allocations to each asset class this year
- More than 70% of EMEA investors plan to increase allocations to
private equity
- More than two-thirds of respondents in Asia-Pacific plan to add
to their private credit allocations
- Income generation is the top reason for investors allocating to
private markets, with capital appreciation ranked in second
place
Notes for Editors
- BlackRock Alternatives surveyed senior executives and
allocators at more than 200 institutions in 22 countries, managing
US$15 trillion in assets, with $3.2 trillion invested in private
markets. This represents an estimated 25% of the entire global
private markets institutional investment landscape.
- Respondents included public pensions, corporate pensions,
insurers, family offices, foundations and endowments, and sovereign
wealth funds.
- The survey was undertaken from October 2022 through January
2023.
About BlackRock Alternatives
BlackRock Alternatives serves investors seeking outperformance
in infrastructure, private equity, credit, real estate, hedge funds
and multi-alternatives. We strive to bring our investors the
highest quality investments by drawing upon our global footprint,
superior execution capabilities and position as a preferred
partner. BlackRock manages $320 billion in alternative investments
and commitments on behalf of clients worldwide as of March 31,
2023.
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