Private Placement Markets in March of 2020 with Strong Deal Activity Despite Worsening Macro Conditions

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Martin Signer activities: Managing Director, IR, test, Testing, Testing, Participant, Partner, Media partner, Media partner, Event manager, Events, Tester, Event listing, Tester, IR, IR, Test, Managing Director, IR, IR, IR, IR Partner

Mar 16, 2020

The Private Placement Markets Complete an Impressive Decade of Growth. Private Placement Market Assets Under Management (AUM) grew by 10 percent in 2019, and by $4 Trillion USD in the past decade, an increase of 170 percent, while the number of active private equity (PE) firms has more than doubled and the number of U.S. sponsor-backed companies has increased by 60 percent. Over that same period, Global Public Market AUM has grown by roughly 100 percent, while the number of US publicly traded companies has stayed roughly flat (but is down nearly 40 percent since 2000).
The Fundraising Outlook Remains Favorable. The early prognosis for the remainder of 2020 is for continued strength: by the end of 2019, large firms had announced targets collectively approaching $350 Billion USD, more than at year-end 2018. Further, limited partners (LPs) continue to raise their target allocations to Private Placement Markets. Even at current levels, LPs appear to be under-allocated versus target levels by more than $500 Billion USD in Private Equity alone—as much as the global amount raised for Private Equity in 2019.
Some 57% of Private Placement Markets – Market Participants (institutional investors) surveyed by Market Coordinators of the Private Placement Debt & Equity Markets worldwide think the economy has reached a cyclical peak, while 14% think it has already entered a recession. They are also significantly more worried about geopolitical conditions than they were a year earlier. Overall, these concerns about market stability help explain why their No. 1 source of anxiety (70% of respondents) is overheated asset valuations.
A growing number of Private Placement Markets – Market Participants (institutional investors) have already taken steps to prepare. Roughly 40% of the Global Investors surveyed have altered their investment strategies, with some assessing recession risks more carefully during due diligence. Others are building more balanced portfolios to emphasize countercyclicality, and most are either accelerating exits or getting more wary of overpaying.
Despite the somber macroeconomic outlook from the recent Global Coronavirus Outbreak, Private Placement Markets investing activity is not slow much signs of slowing down. Private Placement Market Investors and Fund Managers currently active in the Debt and Equity Markets have continued to make deals on the Primary Markets, find exits on the Secondary Markets and raise even more capital than ever (though through fewer funds), fueled by enthusiasm from the vastly developing Private Placement Markets.

Articles authored by Martin Signer

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