Fund managers bullish on private equity in 2024 despite sector headwinds

Another key trend in the research was the spike in managers looking to move towards an alternative third-party service provider over the next year, now sitting at 29 per cent.

A key survey of private equity funds has found most managers are bullish for the year ahead despite the challenges facing the sector.

In a study from Carne Group, which surveyed over 200 fund managers that collectively manage $1.6trn, private equity was selected by respondents as the most popular alternative investment.

28 per cent expected the level of fundraising by private equity firms in 2024 to increase dramatically this year, while 50 per cent anticipated a slight rise.

The corresponding figures for renewable energy were 30 per cent and 31 per cent, and for hedge funds were 27 per cent and 29 per cent respectively.

Despite the bullishness of the managers, private equity firms have seen their success falter over the last year, as the IPO market has frozen up and the M&A market has slowed considerably, firms have struggled to monetise their existing holdings.

Still, this hasn’t stopped managers from looking for more funds to finance deals.

Of the managers surveyed, 83 per cent expected the flow of new capital into their funds to increase this year.

73 per cent of respondents expected the number of new funds launching in their sector this year will be higher than in 2023, with 14 per cent expecting a dramatic increase.

Another key trend in the research was the spike in managers looking to move towards an alternative third-party service provider over the next year, now sitting at 29 per cent.

23 per cent of respondents expected a dramatic increase in the use of third-party management companies over the next couple of years, while 56 anticipated a slight rise.

This is due to the rising pressure on fund managers to reduce, as well as allowing fund managers to focus on their investment capability, Carne Group argued.