The global private equity market is expected to witness a moderate growth rate of 10.2% during the forecast period of 2022-2028. As per the analysis, the global buyout deal reached US$ 1,120 billion in 2021. Private equity is an alternate investment that is usually investing in the equity of companies that are not publicly traded (venture capital funds) or in the equity of publicly traded firms that the fund intends to take private (leveraged buyout funds). Investing in private equities is considered an alternate investment as the general public neither intends to invest in private companies nor they have the kind of token money required to invest in private equities. Ultra-high net individuals and high net individuals (HNIs) provide the major investment capital to private firms.
The major reason responsible for the growth of this market is increased activity in private equity deals. SPACs require a relatively low initial investment with a very significant growth potential and a shorter investment period, which is expected to be the key reason for the upsurge in private equity deals in the forthcoming years. SPACs are anticipated to be sponsored by a wide range of people and institutions as it is an attractive alternative to an exit through an IPO because they provide sellers to receive more cash at closing and are a feasible route to the public markets even during periods of market volatility.
Moreover, the emergence of business reality shows like Shark Tank all over the globe has fueled the start-up culture in various countries, increasing the need for funding in private equity firms. Not only this, Shark Tank provides a platform for HNIs and angel investors to invest in private companies in exchange for an equity stake, which is expected to increase the private equity deals in the upcoming years. Furthermore, in the historical period, the private equity market has seen strong growth in the leveraged buyout (LBO) activity, emerging across a broad range of industries globally. In addition to that, the budding need for diversification of funds has interested many HNIs and other angel investors in investing in private equity firms.
The sheer volume of capital sloshing through the market and the growing need for diversification to fuel the market growth
Unlike other investment asset classes, investing in private equity has the potential to earn exceptional returns only if the investor is willing to undertake exceptional risk. Moreover, the perfect correlation of private equity returns with traditional investment returns indicates that the investor will be benefitted from portfolio diversification benefits by including private equity in portfolios. In addition to that, the PE firms’ ability to add value to their portfolio companies and deliver high returns could attract fresh capital and reinvestments, which may fuel assets under management (AUM) growth, further affecting the growth of the Private equity market. Furthermore, the regulation of the market is comparatively light, which is expected to excite more HNIs to invest in private equity.
North America dominates the global private equity market
North America holds a major share of the global private equity market in 2021 and is expected to maintain its trend over the forecast period. This growth is fueled by a sudden and sharp increase in public-to-private (P2P) deals and investors paying huge multiples for an equity stake in such companies. The majority of P2P transactions are incurred in the Technology sector. While North America dominates the private equity market, the Asia-Pacific region is expected to be the fastest-growing region on the basis of total AUM. This growth of the Asia-Pacific region is majorly due to the increased capital focused on Asia-Pacific’s E-commerce and technology sector. The major share of Asia-Pacific’s AUM is expected to be focused on growth equity as Asia-Pacific investors are more focused on growth than a buyout. Europe stands third, after North America and the Asia Pacific on the basis of private equities investment.
Market Structure and Competitive Landscape
The global private equity market is fragmented in nature and observes intense competition in the market. Some of the prominent players that contribute significantly to the market include Advent International, Apollo Global Management, The Blackstone Group Inc, The Carlyle Group Inc, CVC Capital Partners, KKR & Co. Inc, Thoma Bravo, EQT AB, Vista Equity Partners, TPG Capital, Bain Capital, Warburg Pincus LLC, and Neuberger Berman Group LLC among others.
Product launches, mergers & acquisitions, joint ventures, partnerships and collaborations, and geographical expansion are key strategies adopted by the players in the Global private equity market. These companies adopt numerous approaches to strengthen their market share and gain a competitive edge over other competitors in the market. Some of the key developments in the market include,
- In September 2022, Nonantum Capital Partners, a middle-market private equity firm, today announced the acquisition of LJP Waste Solutions (“LJP”) from Aperion Management. LJP is a leading regional provider of non-hazardous solid waste and recycling services that specializes in zero landfill and waste-to-energy solutions.
- In August 2022, Indian firm Trilegal acted as the sole advisor to global consumer internet group and technology investor Prosus Ventures, and PayU India for the acquisition of IndiaIdeas.com Limited (BillDesk). It is the largest-ever acquisition in the digital payments space in India, and the deal is valued at US$ 4.7 billion.
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Key Market Segmentation
RationalStat has segmented the global private equity market on the basis of deal size, fund type, sector, and region.
- By Deal Size
- Less than US$ 0.1 Bn
- US$ 0.1 – US$ 1 Bn
- US$ 1 – US$ 2.5 Bn
- US$ 2.5 – US$ 5 Bn
- US$ 5 – US$ 10 Bn
- More than US$ 10 Bn
- By Fund Type
- Venture Capital (VCs)
- Real Estate
- Other (Distressed PE, Direct Lending, etc.)
- By Sector
- Technology (Software)
- Real Estate and Services
- Financial Services
- Consumer & Retail
- Energy & Power
- Media & Entertainment
- Others (Transportation etc.)
- By Region
- North America
- Latin America
- Western Europe
- Eastern Europe
- Asia Pacific
- Middle East & Africa
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- Industry and market-related documents available in the public domain
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The report is intended for private equity firms, private equity processors, venture capitalists, government organizations, educational organizations, regulatory agencies, and market research firms, among others. The report provides an in-depth analysis of market size, consumption patterns, ongoing market trends and challenges, and future market opportunities. The report will serve as a source for a 360-degree analysis of the market thoroughly delivering insights to clients to find the right answers to their business questions.
Frequently Asked Questions (FAQs)
The Global Private Equity market is expected to grow at a CAGR of 10.2% during the forecast period 2022-2028.
North America holds a prominent share in the Global Private Equity market.
The global buyout deal reached US$ 1,120 billion in 2021.
The Global private equity market is primarily driven by the growing need for diversification among the HNIs.
Major companies operating in the Global Private Equity market include, Advent International, Apollo Global Management, The Blackstone Group Inc, The Carlyle Group Inc, CVC Capital Partners, KKR & Co. Inc, Thoma Bravo, EQT AB, Vista Equity Partners, TPG Capital, Bain Capital, Warburg Pincus LLC and Neuberger Berman Group LLC among others.