But their venture capital peers are more cautiously optimistic about fundraising
Fundraising for private equity (PE) firms is likely to be an uphill battle according to a global survey.
The new S&P Global Market Intelligence 2023 Private Equity Outlook Survey reveals that almost half (45%) of private equity executives surveyed expect fundraising conditions in their location to worsen this year while one third (34%) said conditions will remain the same.
For venture capital (VC) professionals, things were more optimistic with around 35% each between those expecting things to be tougher and those anticipating a hold-steady.
The outlook comes from a poll of private equity, venture capital and limited partner (LP) professionals worldwide.
"It will continue to be a multifaceted nature of the industry, with market volatility and macroeconomic risk being mentioned as common obstacles for GPs (general partners),” noted Ilja Hauerhof, director of New Product Development and Research for Private Markets at S&P Global Market Intelligence. “Simultaneously, LPs still favour PE as their top alternative asset class and anticipate it to provide the largest returns in 2023. While secondary fund restructuring raises concerns for 52% of surveyed LPs, it also presents opportunities as long as GPs prioritize transparency and act in the best interest of LPs."
Other findings
The survey also found that:
- GPs have more pessimistic expectations for deal activity, with 24% predicting a deterioration this year compared to 7% last year.
- PE and VC professionals have differing opinions on the effect of geopolitical factors on their strategies. 52% of European PE professionals believe that the geopolitical situation will affect their strategies, whereas only 39% of their VC counterparts share this view.
- 43% of LPs investing in PE will increase their asset allocation in PE in 2023, while VC and private debt are likely to see a decrease in allocation.
- A significantly higher proportion of LPs in North America (25%) are considering changing their GPs in 2023 compared to their counterparts in Europe, where only 9% are contemplating a GP switch.
More than 500 PE and VC professionals were surveyed for the report.
