From Investing.com: 2024-10-19 05:30:00

Private equity, impacted by economic challenges and high interest rates since 2022, is showing signs of stabilization and recovery. Wells Fargo analysts note the sector’s navigation of turbulent times through selective investments and secondary strategies, preparing for future growth as the macroeconomic outlook improves.

In 2024, private equity faced extended fundraising, dealmaking, and exit timelines. Median fundraising time increased to 18 months from 11 months two years ago. The holding period for exits also rose to a median of seven years, reflecting cautious strategies in a pressured market.

Firms are recalibrating strategies for long-term growth amidst the slow pace, with a focus on secondary markets for returning capital and quality investments in established companies over quantity to mitigate risk.

Buyout strategies, especially in small- and mid-cap spaces, are rebounding faster than venture capital in 2024. Buyout deal and exit values increased by 24% and 14% respectively in the first three quarters, while venture capital struggles under high interest rates and market volatility.

Investors and fund managers are increasingly selective, gravitating towards experienced managers with reliable networks. Wells Fargo analysts highlight the growing appeal of small- and mid-cap buyout deals, expecting private equity to regain momentum in 2025 with easing monetary policy.

Private equity’s potential growth lies in AI-related ventures, as advancements in AI are expected to create robust investment opportunities. Despite recent challenges, the sector’s resilience is evident as cautious, strategic approaches shape capital deployment for long-term asset appreciation.



Read more at Investing.com: Navigating Private Equity as backdrop improves By Investing.com