Home Hedge Funds Double-digit growth in Asia-Pacific private markets AUM expected over 5 years

Double-digit growth in Asia-Pacific private markets AUM expected over 5 years

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“The deterioration of the macro picture hasn’t necessarily been factored in” to Preqin’s estimates so there’s additional downside risk but it’s a five-year forecast and a lot will depend on “how long this macro environment persists,” Mr. Joyce said.

Preqin’s data scientists are in the midst of updating the firm’s models to pave the way for more granular forecasts, moving beyond AUM and fundraising to “map out the whole industry” at the level of deals and exits, Mr. Joyce said.

Meanwhile, Preqin’s “The Future of Alternatives 2026” report on the global private markets outlook, due out Oct. 5, will more fully incorporate this year’s evolving macroeconomic and macro-policy developments into the firm’s forecasts, he said.

With the same headwinds prevailing now around the globe, the Asia-Pacific region should have some relative strengths as well as weaknesses, the Preqin report said.

One advantage: inflationary pressures remain modest for most countries in the region, compared with the U.S.

On the negative side, the retreat by equity markets globally this year should prove to be a headwind for a region that relies on initial public offerings for a relatively high proportion of its private equity exits.

There’s a heavier dependence in the region on IPOs, priced off public market multiples, noted Mr. Joyce in the interview. With multiples dropping this year, general partners facing challenges in achieving exits at valuations as currently marked could slow down their exit activity, he said.

“When you look at the deal side as well, I think we’re going to see managers looking for more structured deals (and) more downside protection when they do deals,” he said.

Still, Preqin predicts private equity, including venture capital, will remain the focus of Asia-Pacific private markets activity, with 83% of the region’s allocations by 2026, up from 73.6% at the end of 2021.

Over that same five-year span, Preqin predicts the share of total Asia-Pacific private markets allocations held by real estate funds will drop to 8.5% from 14.1%, with private debt funds falling to 4.4% from 6.3%, and infrastructure funds sagging to 3.8% from 5.5%.

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