Global private equity (PE) market showed signs of resilience last year despite deteriorating macro conditions, according to the Bain and Company’s 11th annual Global Private Equity Report.
The global PE has its strongest six-year stretch in the industry’s history with $3.2 trillion in disclosed buyout deal value, with buyout firms attracting a record amount of capital and increasing their share to 40% of total private capital.
“Private equity investors had another strong year but they had to work harder than ever for their deals to be successful,” said Hugh MacArthur, global head of Bain and Company’s Private Equity practice.
“Our research highlights a notable development in the US buyout market. For the first time, the returns of public markets and private equity have converged over a 10-year period. This raises questions about how private equity can stand out and remain attractive to investors going forward.”
As far as the technology sector is concerned, the private equity would still be able to find good opportunities in the sector because by nature PE avoid the most ‘hyped tech segments’ and tend to invest instead in enterprise software companies that were more resilient in a downturn.
However, there were increased challenges for general partners (GPs) with capital being poured into the industry, hitting a new record of $2.5 trillion for private capital and $830 billion for buyouts alone.
When it came to impact investing, MacArthur said: “GPs can no longer do without a clear environmental, social and governance (ESG) strategy.
“Impact investing has the potential to be a clear game changer. The question is whether funds can do well by doing good. It is early days, but evidence such as technology and a shift in the consumer mindset is building to support the idea that impact investing will enhance performance, not detract from it.”
