Weekend Digest: Key private equity fundraising developments

Weekend Digest: Key private equity fundraising developments

In a significant shift, institutional investors are increasingly allocating a larger portion of their portfolios towards alternative assets such as private equity, private debt, and infrastructure. This trend, driven by the desire for better diversification, enhanced returns, and protection against volatility in traditional markets, is set to reshape the investment landscape.

Key aspects of this trend include increased allocations and capital growth. Private wealth and sovereign wealth funds, along with insurance-focused investment managers, are leading this growth. For instance, private market allocations have expanded from 15% to 21%, amounting to over $800 billion in capital committed to longer-duration private investments [4][5].

The focus on alternatives like private equity, private credit, real estate, and infrastructure provides return streams less correlated with traditional 60/40 stock-bond portfolios, thereby helping to mitigate risks such as inflation and economic uncertainty [1][2].

As investments in alternatives tend to be less liquid, there is a growing adoption of structures such as evergreen funds, which offer periodic redemption schedules on perpetually renewing investments. These vehicles have attracted more than $420 billion and are expected to grow at over 20% annually in the next five years [4].

Despite a decline in deal activity in some areas like venture capital and private equity since 2021, the overall interest remains strong. Strategic deployment is focused on versatile strategies, secular growth areas (like AI and infrastructure), and careful capital deployment amid an evolving macroeconomic landscape [2][4].

Technological and structural innovation is another facet of this trend. Institutional investors are adopting more complex portfolio and risk management systems to handle the nuances of private markets, indicating a maturing and professionalizing of alternative investments management [4].

In other news, Harbinger Sports Partners Fund, a $750m private equity fund, is focusing on acquiring minority stakes in franchises across the NBA, NFL, and MLB. The oversubscribed vehicle will enable four portfolio companies - Aspen Pumps, Rosemont Pharmaceuticals, Ocorian, and CNX Therapeutics - to continue their growth trajectories. Harbinger Sports Partners Fund is led by Rashaun Williams and Steve Cannon, and Mark Cuban has joined as a general partner. The focus for these portfolio companies is on international expansion and M&A [1].

Elsewhere, Carlyle Group plans to hire ten new professionals in 2025 for its Japan deal team. Japan's Government Pension Investment Fund (GPIF) has committed $500m to a private equity vehicle managed by Thoma Bravo, marking a part of its long-term strategy to diversify away from traditional equities and bonds and increase its exposure to private markets [2].

The Swiss pension fund GastroSocial has increased its private markets allocation to 33% of its CHF11bn ($12.5bn) portfolio. Inflexion has announced the final close of its £2.3bn Inflexion Continuation Fund I, marking the largest multi-asset continuation fund raised in Europe to date [3].

Lastly, the revised allocation includes 9% each in private equity, private debt, and infrastructure, alongside 5% in international real estate and 2% in insurance-linked securities. Carlyle Group has begun deploying its JPY430bn ($3bn) fifth Japan buyout fund [2]. These developments underscore the growing interest in alternative assets and the strategic opportunities they present for institutional investors.

1. Institutional investors are allocating a larger portion of their portfolios towards alternative assets, such as private equity, private debt, and infrastructure, for better diversification, enhanced returns, and protection against volatility.
2. Private market allocations have expanded from 15% to 21%, amounting to over $800 billion in capital committed to longer-duration private investments.
3. Alternatives like private equity, private credit, real estate, and infrastructure provide return streams less correlated with traditional 60/40 stock-bond portfolios, helping to mitigate risks such as inflation and economic uncertainty.
4. Evergreen funds, offering periodic redemption schedules on perpetually renewing investments, have attracted more than $420 billion and are expected to grow at over 20% annually in the next five years.
5. Despite a decline in deal activity in some areas, overall interest in alternatives remains strong, with strategic deployment focused on versatile strategies, secular growth areas, and careful capital deployment amid an evolving macroeconomic landscape.
6. Harbinger Sports Partners Fund, a private equity fund, is focusing on acquiring minority stakes in franchises across NBA, NFL, and MLB, enabling its portfolio companies to continue their growth trajectories.
7. Carlyle Group plans to hire ten new professionals in 2025 for its Japan deal team, indicating a growing interest in private markets and the strategic opportunities they present for institutional investors.

Read also: