The report identifies key trends driving investor interest in private equity, credit, and infrastructure
Mackenzie Investments, in partnership with Northleaf Capital Partners, has released its inaugural Private Markets Outlook, highlighting key private market asset classes and the expected growth drivers in investor demand.
This report targets financial advisors and investors, providing an overview of private market investment opportunities.
It forecasts an increase in private market investment opportunities across private equity, private credit, and private infrastructure. This growth is attributed to companies perceiving benefits in remaining private longer and a growing need for private capital to support critical infrastructure projects.
Additionally, recent volatility in public markets has prompted investors to seek alternatives that can offer enhanced alpha potential and increased diversification. These factors are anticipated to sustain investor interest in private market investments.
“With the recent volatility in the broader public markets, we expect to see accelerated growth in the private markets given the growing range of accessible, compelling investment opportunities, many of which are still largely untapped by individual investors,” stated Allan Seychuk, vice president, Alternatives, Mackenzie Investments.
Seychuk noted that the evolution of markets has led to the creation of new fund structures more suitable for individual investors, expanding investment opportunities.
The Private Markets Outlook outlines three key themes offering compelling mid-market opportunities for investors:
- Notable Growth Expected for Private Equity and Mid-Market Secondaries
The private equity secondary market has experienced growth in transaction volumes in 2023 and the first half of 2024, partly due to a slower M&A environment resulting in longer holding periods for mature private equity portfolios.
This trend has driven institutional investors to seek liquidity solutions for funding further growth opportunities and managing portfolio risk. Notably, secondaries currently account for less than five percent of the overall private equity market, suggesting significant opportunities ahead.
- Growing Opportunity in Private Credit
As banks increasingly withdraw from lending to private companies due to regulatory restrictions, private lenders may encounter substantial investment opportunities by providing the flexible capital solutions that many borrowers require for business growth.
Historically, private credit lending has offered a return premium compared to many public fixed income investments, along with strong rates of capital preservation and lower volatility.
- Significant Increase in Demand for Infrastructure Assets
Northleaf predicts ongoing investment in essential infrastructure, such as bridges, roads, power generation, and telecommunications, driven by the need to maintain and repair aging infrastructure.
The substantial capital required for these investments cannot be solely met by public funding. Private infrastructure presents an evolving investment option, including new opportunities in sustainability and technology, which are expected to become one of the fastest-growing segments in private markets.
“As highlighted throughout our report, private markets are expected to provide new and notable investment opportunities for institutional and individual investors,” explained Nadim Vasanji, managing director, Northleaf Capital Partners.
Vasanji added that private investments have demonstrated resilience across economic cycles, contributing essential return and diversification benefits to portfolios.
Moving forward, more investors are expected to incorporate and grow private asset exposure in their portfolios as a complement to their public market holdings.
