Private Equity Market Expected to Reach $1098.7 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Private Equity Market, By Fund Type (Buyout, Venture Capital, Real Estate, Infrastructure, Others), By Sector (Technology, Financial Services, Real Estate And Services, Healthcare, Energy And Power, Industrial, Others): Global Opportunity Analysis And Industry Forecast, 2023-2032". The private equity market was valued at $445.43 billion in 2022, and is estimated to reach $1098.7 billion by 2032, growing at a CAGR of 9.7% from 2023 to 2032.

In the private equity market, several notable trends have been shaping investment landscapes. There is a private equity market growth in emphasis on technology and digital transformation. Private equity firms increasingly target tech-driven companies or invest in traditional businesses undergoing digitalization to enhance efficiency and competitiveness. In addition, there is a surge in ESG integration, with investors prioritizing sustainability and responsible investment practices. Private equity firms have integrated ESG considerations into their strategies, aligning with societal and environmental goals while potentially enhancing long-term value.

Another private equity market trends involves heightened competition and deal multiples, leading to a quest for alternative investment strategies and diversified portfolios to mitigate risks. Furthermore, there is a notable shift in focus toward healthcare and life sciences investments, driven by demographic changes and advancements in healthcare technology. Lastly, exit strategies have evolved, with more firms exploring SPACs (Special Purpose Acquisition Companies) as an alternative to traditional IPOs, providing a quicker path to public markets for portfolio companies.

Furthermore, major players in the private equity market analysis have entered into partnership to cater to the change in consumer preferences and offer more enhanced services to their customers. For instance, on November 27, 2023, the private equity firm, True North entered the private credit market with the launch of 'True North Private Credit'. The company said it recognized the need to expand its product offering beyond private equity (PE) to leverage its capabilities and fully deliver value to all stakeholders.

The private credit sector in India is fast evolving into a robust segment, driven by the favorable risk-reward equation and the presence of a good regulatory framework. Hence, True North has decided to foray into private credit (PC) to offer agile capital solutions to well-governed and profitable enterprises and deliver superior, risk-adjusted returns to its investors.

Furthermore, on July 27, 2023, Verity, a leading provider of investment research and management software, announced the launch of VerityRMS for private equity industry, a deal intelligence platform that streamlines due diligence and dealmaking processes for private equity firms. For over a decade, Verity has empowered the  leading fund managers of the globe to centralize their research, boost collaboration, and accelerate decision-making. Thus, such strategies adopted by players in the private equity market trends is anticipated to enhance the growth of the market across the globe and it is expected to further increase the adoption of private equity policies in the upcoming years.

On the basis of fund type, the buyout segment is the highest growing segment in the private equity market due to its versatility and applicability across diverse industries. Buyout funds often acquire controlling stakes in established companies, enabling private equity firms to implement strategic changes, drive operational efficiencies, and ultimately generate substantial returns upon exit. Their attractiveness lies in the potential for restructuring, streamlining operations, and enhancing company performance, aligning with investor preferences for mature investments with proven track records. However, the infrastructure segment is expected to be the fastest-growing segment during the forecast period.

The global shifts toward sustainable development in private equity market size, increased demand for modern infrastructure, and the focus on renewable energy solutions. Infrastructure investments address critical needs for energy transition, transportation upgrades, and technological advancements, attracting private equity due to long-term revenue potential and the essential nature of these projects. In addition, government initiatives, public-private partnerships, and emerging market opportunities further fuel growth prospects for infrastructure investments, making it a prominent contender for accelerated expansion within the private equity landscape.

North America has secured the largest share in the private equity market growth in 2022. This is due to its well-established financial infrastructure, a robust ecosystem for investments, and a history of successful deals. The region benefits from a mature economy, a large pool of investible companies, and a supportive regulatory environment that encourages private equity activities, attracting significant investments from various sources. On the other hand, Asia-Pacific is expected to experience the fastest growth in the private equity market. This is due to the fact that this region boasts rapid economic development, a burgeoning middle class, and increase in entrepreneurial activity. In addition, there is a growth in openness to private equity investments, favorable demographics, and a rise in number of high-growth potential companies. These factors, combined with improving regulatory frameworks and a dynamic business landscape, contribute to the forecasted rapid expansion of the private equity market in the Asia-Pacific region.

COVID-19 had a mixed impact on the private equity market. Initially, there was a downturn as uncertainty and market volatility surged, leading to deal postponements and valuation challenges. However, as the economy stabilized and rebounded, the market saw increased opportunities for distressed asset acquisitions at attractive valuations. Sectors like technology, healthcare, and e-commerce experienced growth, bolstering the performance of certain private equity portfolios. Overall, while the pandemic initially posed challenges, it also created avenues for strategic investments and lucrative opportunities, resulting in a mixed impact on the private equity industry.

Key Findings of the Study

• By fund type, the buyout segment led the private equity market in terms of revenue in 2022.
• By sector, the technology segment accounted for the highest private equity market share in 2022.
• By region, North America generated the highest revenue in 2022.

The report profiles the key players operating in the private equity market analysis such as Apollo Global Management, Inc., Bain Capital, LP., Blackstone Inc., EQT AB, HELLMAN & FRIEDMAN LLC, Insight Partners, KOHLBERG KRAVIS ROBERTS & CO. L.P., Tarrant Capital IP, LLC, The Carlyle Group, and Thoma Bravo. These players have adopted various strategies to increase their market penetration and strengthen their position in the private equity market.