Adams Street Partners research shows that 90% expect private markets to outperform public markets in the long term, with two-thirds planning to increase allocations in 2024, highlighting the importance of digital disruption.
The private market investment landscape is undergoing significant change, with investors expressing increased confidence and strong interest in the technology and healthcare sectors. A recent global survey conducted by Adams Street Partners, LLC underscores this view, revealing that nearly 90% of respondents expect private markets to outperform public markets over the long term.
The optimism is not unfounded, as two-thirds of those surveyed plan to increase their private markets allocations in 2024. This strategic move is supported by a belief in the resilience of private markets, which are seen as better equipped to deal with economic uncertainty and short-term fluctuations compared to their public counterparts.
There is also a noticeable shift in geographic preferences, with North America and China experiencing a slight decline in their perceived investment potential. Conversely, the emerging markets of Asia-Pacific and Europe are gaining popularity among investors. This change reflects a dynamic international investment landscape where diversification is increasingly important.
The survey shows that investors are particularly bullish on sectors poised to benefit from digital disruption. Forty percent of respondents predict that technology and healthcare will offer the most lucrative opportunities in 2024, with AI being an important catalyst in these areas. This is further confirmed by the fact that financial services are also gaining favor, with half of investors targeting this sector.
Venture capital and growth capital play a key role in fueling innovative, technology-focused startups. This is evidenced by more than 80% of surveyed investors considering allocating a significant portion of their private market shares to these strategies.
The secondary market and private credit also saw a spike in interest. The growing appetite of investors for diverse asset classes is evident, especially during the liquidity constraints faced by the M&A and IPO markets. Private credit, with its flexibility and attractive returns, is highly preferred by both investors and borrowers.
In terms of manager selection, deep sector expertise and advanced digital analytics are among the top features valued by investors. This reflects a broader trend towards data-driven decision-making and specialization within the investment community.
Amidst the optimism, geopolitical risks remain worrisome. Survey respondents highlighted the US political climate as the most significant threat to global economic stability, followed by ongoing tensions between Israel and Hamas and US-China relations.
Interestingly, blockchain technology is regaining investor confidence. A significant majority of survey participants are considering investing in cryptocurrency or blockchain-related opportunities in the coming years, indicating a resurgence of interest in this area.
Overall, as we move into 2024, it is clear that private markets are expected to experience significant growth and transformation driven by digital innovation and evolving investor strategies. Adams Street Partners’ full report, Navigating Private Markets in 2024: Opportunities Emerge as Change Accelerates, provides an in-depth analysis of these trends, reflecting the sentiments of 100 institutional investors from the US, Europe and Asia Pacific.
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