Private Markets 2024: Why It Will Be on Everyone's Radar

2023 was a rough ride for investors across the board, with both public and private markets taking significant hits. But as the dust settles, a question emerges: could 2024 be the year private markets, particularly private equity, reaches an inflection point and attract the attention of even more investors, from seasoned institutions to observant retail investors?

While 2023 presented challenges, it also laid the groundwork for potential transformation in the private markets landscape. In the next couple weeks we will take a closer look into four factors that could shape this transformation in 2024:

Private Markets Current Dynamics: Whilst the fundraising became more selective, and transaction activity slowed down in 2023, the high-quality companies with strong fundamentals and skilled private equity fund managers continued to attract capital. With private markets valuations adjusting, 2024 will be ripe with interesting M&A opportunities. The record high dry powder and incentives from different industry players will drive the transaction volume up from 2023 lows. The sophisticated manager selection will be a key tool to harvest once in a decade investment opportunities in private markets.

Institutional Investors Embracing a New Wave: As public and private company valuations stabilize and denominator effects fade, the institutional investors with capital at hand will tap into private markets to seize the current investment opportunities. The new entrants, potentially very sizeable ones, will boost availability of capital in private markets for the foreseeable future.

Private Wealth and Unleashing the Power of "Quiet Money": The recent rise of private wealth divisions in major financial institutions and new financial products launched for these segments signal that there must be some untapped potential here. And indeed it is... The amount of wealth held in private hands might surprise you but even more so the appetite from these individuals to invest in private markets. Nonetheless, the most transformative development could be a potential opening up of private markets to retail investors. 
 

Public Markets Tune In: Recent volatility and lower returns in public markets (surely, depends from the time frame analysed) could push investors towards private markets, seeking greater stability and potentially higher returns. With US banks finishing 2023 at 35-year low returns compared to S&P and private credit stepping in to bridge more financing gap in the mid-market companies, unsurprisingly, public market investor might be more inclined to learn about private markets, especially the players that are publicly listed. And the next big IPO might not be as flashy as the tech one but surely lucrative enough to pay attention.

This is just a short glimpse into each factor and there is so much more to come! In the coming weeks, we'll delve deeper into each of these factors, exploring trends, challenges, and opportunities that arise. As always, we will also provide many additional resources that you can read and make your own conclusions. Stay tuned!