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Investor interest in private equity is currently strong and is set to remain so for the coming year. According to private markets specialist Preqin, 79% of investors in private equity expect to increase their allocation to the asset class over the next five years.
It’s likely that private equity is on a long-term growth trend due to factors such as:
Large buyout fund raising is significantly above its long-term trend and pre-IPO stage unicorns have ballooned in recent years. This has been driven by investments by non-traditional late-stage investors, such as the $100 billion Saudi Arabia-backed Softbank Vision fund.
Market segments with high barriers to entry show the healthiest market dynamics with fund managers scaling up to raise significantly larger funds, thereby exiting these smaller market segments.
Investor emphasis is likely to rise on ESG characteristics in 2020, especially in Europe where heightened awareness of climate change and the European Commission’s Sustainable Finance initiative are important drivers.
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