By 2023, private equity will be significantly larger than today, according to specialist data firm, Preqin.
In a new paper published this week covering the future of alternatives, Preqin predicted that by 2023, global assets under management will stand at around US $14 trillion.
Mark O’Hare, chief executive of Preqin, predicted there will be 34,000 fund management firms active globally (a rise of 21 percent versus 2018).
Preqin said the growth will be dependant on alternatives’ track record and enduring ability to deliver superior risk-adjusted returns to its investors as well as investors’ need for alpha—whether that is found in private capital or public markets.
Preqin predicted growth will also be dependent on the steady decline in the number of listed stocks, as private capital is increasingly able to fund businesses through more of their lifecycle, Preqin said.
The data firm stated that the importance of technology in the future should not be underestimated.
It said: “Technology (especially blockchain) will facilitate private networks and help investors and fund managers transact and monitor their portfolios, and reduce costs versus public markets.”
Preqin added: “The mass affluent around the world would like to increase their investment in private capital if only the structures and vehicles (and regulation) permitted; technology will help.”
When considering emerging markets, Preqin said the Chinese venture capital industry already matches that of the US in size.
“Further emerging markets growth will be a ‘double whammy’ of gross domestic product growth and higher penetration of alternative assets”, Preqin predicted.
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