Private capital update 2021

Bain and McKinsey have their versions of the private market reviews of 2022.

1. Private markets fund-raising recovered by nearly 20% to reach its highest level ever in 2021, with North America and Europe making up more than four-fifths.

2. Private equity, real estate and private debt dominate the sectoral allocation, whereas infrastructure is a very small proportion.

3. Infrastructure forms a really tiny share of the private capital dry powder.

4. Global private capital raised each year is dominated by buyout funds.

5. The total assets under management too mimic these annual trends on destinations and the types of private capital. Buyout, venture capital, and growth investments are the major sources of PE in particular and also private capital flows in general. 

6. Private equity remained the highest earning asset class. Notice that infrastructure is among the lowest earners.

7. The median performing private equity funds have done better than the best funds in real estate or infrastructure.  

8. In terms of returns, venture capital, growth, and buyout funds have returned the highest, and infrastructure the lowest. VC has outpaced the other PE categories in eight of the last ten years.

9. Private equity which made up nearly 60% of the global private capital flows, is dominated by services, energy and healthcare. There is very little of private capital going into areas like manufacturing, thereby revealing the preference for high growth or high valuation sectors.

10. Global infrastructure and natural resources fund raising too recovered and peaked in 2021. However, as seen from the graphic, just $7 bn out of the $137 bn went into Asia (or $119 bn out of $137 bn went to North America and Europe).

11. Within infrastructure too, the vast majority was made up of energy, traditional transport, and telecommunications.

12. Assets under management of private capital in Asia has been growing fast.

The vast majority of these are in technology sector, and there too in e-commerce, software, and online services.