Blackrock (Private Markets) 2024 Outlook

Notes

That said, private markets investors are used to pivoting. If IPO activity does not return, investors have been active in developing other options for exits, for example secondaries.

Private debt continues to grow and cement its status as a sizable and scalable asset class for a wide range of long-term investors. Totaling more than US$1.6 trillion globally, as of March 20231, it represents roughly 12% of the US$13 trillion alternative investment universe.
Generally, private debt loss rates have compared favorably with the public markets. In the second quarter of 2023, trailing 12-month loss rates for USD Leveraged Loans and USD High Yield were 1.68% and 1.62% respectively, versus 0.69% for direct lending, according to the Cliffwater Direct Lending Index.
PE

Deal activity. Rising rates, inflationary pressure, economic and geopolitical uncertainty and a correction in the broader public equity markets have driven slower deal activity. Year-over-year deal count declined by as much as 65% in 2022 and another 40% in 2023
While overall deal volumes have fallen from their 2021 peaks, the private equity market has not shut down completely as firms turn their attention to add-on acquisitions and take advantage of depressed public equity valuations to execute take-private transactions. In particular, public-to-private transactions accounted for about 21% of aggregate deal value through the year compared with 15% over the past five years
Less availability and higher cost of debt has forced private equity buyers to increase equity contributions to complete transactions. While equity as a percent of total capital has been growing in recent years, 2023 is at the time of writing the first time that the average equity contribution is meaningfully more than 50%

In the secondaries market, we’re seeing a continued oversupply of opportunities driving further discounts. Specifically, we see attractive valuations in the growing mid-sized secondaries market, which includes transactions that fall under the radar of larger managers, or are too big for some of the smaller pools of capital to invest in.
PE attractiveness as of now

In the secondaries market, we’re seeing a continued oversupply of opportunities driving further discounts. Specifically, we see attractive valuations in the growing mid-sized secondaries market, which includes transactions that fall under the radar of larger managers, or are too big for some of the smaller pools of capital to invest in.

Transaction volume globally is down 57% year-over-year, largely due to the higher cost of capital. In the near term, limited financing availability will likely contribute to an environment that’s very different from the low-rate world that followed the global financial crisis.