Private Equity and Venture Capital Industry Shows Resilience and Optimism in 2024 Amidst Shifting Market Dynamics according to S&P Global Market Intelligence survey

Rhea-AI Summary

The 2024 Private Equity and Venture Capital Outlook by S&P Global Market Intelligence shows resilience and optimism in the industry despite shifting market dynamics. Private equity executives are more optimistic about deal activity in 2024, with increased interest in private credit asset allocations and AI playing a larger role in deal sourcing. The survey reveals that mid-tier and smaller PE firms are more optimistic, LPs are increasing asset allocation to private credit, and GPs are expanding the use of private credit in deal financing. While fundraising outlook has improved for PE firms, VC firms have concerns about LPs reducing their allocation to VC.

Positive

• Increased optimism among private equity executives for deal activity in 2024.

• Growing interest in private credit asset allocations.

• AI playing a larger role in deal sourcing and target selection.

• Improved fundraising outlook for private equity firms.

Negative

• Concerns among VC firms about LPs reducing allocation to VC.

Outlook reveals increased interest in private credit asset allocations and AI playing a larger role in deal sourcing and target selection

NEW YORK, April 29, 2024 /PRNewswire/ -- The private equity industry is showing resilience and optimism for 2024 despite shifting market dynamics, according to the S&P Global Market Intelligence 2024 Private Equity and Venture Capital Outlook. According to the outlook, private equity executives are notably more optimistic about deal activity in 2024 with 60% expecting an improvement, compared to 34% last year. Survey respondents also showed increased interest in private credit and shared that artificial intelligence (AI) will play a larger role in deal sourcing and target selection.

"This year's survey revealed more optimism among both general partners (GPs) and investors as they are racing for a return to increased deal activity with increasing valuations allowing them to exit their backlog of investments and return cashflows to limited partners (LPs)," said Thomas Mercieca, associate director and lead author for the report, at S&P Global Market Intelligence. "There is also increased investor interest in private credit allocation, with 61% of LPs reporting that they will increase their asset allocation to the asset class in 2024. We are pleased to see that despite macroeconomic challenges still lingering, the industry remains adaptable and poised for growth throughout 2024."

Key highlights from the 2024 Private Equity and Venture Capital outlook:

• Mid-tier and smaller private equity (PE) firms are more optimistic for the deal activity to pick up in 2024 compared to their larger peers.
• 61% of limited partners (LPs) investing in private markets reported they will increase their asset allocation to private credit in 2024.
• Presently, fund managers prioritize personal networks and referrals for sourcing investment opportunities. However, 54% of GP investment professionals foresee AI influencing deal sourcing and target selection in the future.
• Among private equity GPs, in the past year 37% reported expanding their use of private credit in deal financing, with larger PE firms in particular making more use of private credit over bank loans.
• Private equity GPs feel the fundraising outlook has bottomed out: only 15% of GP respondents expect deteriorating fundraising conditions in 2024, versus 45% at the start of 2023. However, among venture capital (VC) firms there are remaining concerns about LPs reducing their allocation to VC.
• A majority of VC professionals expect deal activity to improve in 2024 (68%), but there are a substantial number of respondents saying conditions will stay the same as 2023 (28%).

The S&P Global Market Intelligence Private Equity and Venture Capital Outlook surveyed a total of 370 global private equity, venture capital and limited partner respondents across North America, Latin America, Asia Pacific, Middle Eastern and Africa regions. The survey was fielded between November 16, 2023 and January 12, 2024 covering questions on deal activity, strategy changes, market and firm-level challenges, sustainability consideration and technology adoptions.

To request a copy of the 2024 Private Equity and Venture Capital Outlook, please contact press.mi@spglobal.com. 

S&P Global Market Intelligence's opinions, quotes, and credit-related and other analyses are statements of opinion as of the date they are expressed and not statements of fact or recommendation to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security.

About S&P Global Market Intelligence

At S&P Global Market Intelligence, we understand the importance of accurate, deep and insightful information. Our team of experts delivers unrivaled insights and leading data and technology solutions, partnering with customers to expand their perspective, operate with confidence, and make decisions with conviction.

S&P Global Market Intelligence is a division of S&P Global (NYSE: SPGI). S&P Global is the world's foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world's leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information, visit www.spglobal.com/marketintelligence.

Media Contact:
Amanda Oey
S&P Global Market Intelligence
P.  +1 212 438-1904
E. amanda.oey@spglobal.com or press.mi@spglobal.com

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SOURCE S&P Global Market Intelligence

FAQ

What is the main focus of the 2024 Private Equity and Venture Capital Outlook?

The main focus is to show resilience and optimism in the industry despite shifting market dynamics.

What role does AI play according to the outlook?

AI plays a larger role in deal sourcing and target selection.

Are LPs increasing their asset allocation to private credit?

Yes, 61% of LPs investing in private markets reported they will increase their asset allocation to private credit in 2024.

What is the fundraising outlook for private equity firms?

Fundraising outlook has improved as only 15% of GP respondents expect deteriorating conditions in 2024.

What concerns do VC firms have?

VC firms have concerns about LPs reducing their allocation to VC.