Takeaways from SuperReturn International 2024

We joined the over 5,000 private market peers from 70+ countries who descended on Berlin for SuperReturn International 2024- one of the most exciting weeks on the private equity calendar, filled with a packed schedule of programming, networking and deal-making.

Here are my highlights and main takeaways from the week:

Market outlook: Finding Opportunity Amongst Volatility

GPs appear to believe that the fundraising outlook bottomed out in 2023. The general consensus amongst GPs was that longer fundraising periods will persist, but they see some recovery ahead. Over-deployment of capital is a concern that may impact returns in the future. 

LP optimism seemed more tempered as liquidity needs become more and more pertinent, and investors are re-evaluating allocations for the next cycle. 

The risk outlook for 2024 and beyond is riddled with geopolitical uncertainty and social conflict, which has contributed to longer hold periods. The longer portfolio companies are held, the more attention will need to be paid to evolving macro trends like ESG guidelines, Cybersecurity and AI disruption. 

Software and AI

There was a clear focus on technology and AI this year, with GPs generally agreeing that they must adopt AI or fall behind competition. Productivity was a common theme in discussions of the value proposition of AI and other technologies, with speakers citing due diligence and reporting as areas for implementation outside of back-office functions. 

Specialization 

Speakers explored the benefits of specialization, framing it as a differentiator and a way to appeal to LPs looking to diversify their portfolios. Speakers noted a trend in outperformance of specialized managers over generalists, pointing to higher engagement and returns, as well as success as a deal origination strategy. This coincides with the popularity of tech investment, which requires a deep level of understanding to manage. 

Longer Hold Periods: The New Norm 

We heard from multiple speakers including a tier 1 bank and a large mega buyout manager that longer hold periods may be the new norm regardless of whether IPO’s pick up. This trend could only be in its early stages, according to the GP.   

With slower opportunities for exits, the focus is shifting towards value creation for portfolio companies, in anticipation of a healthier exit market down the line. 

Sponsor-to-sponsor deals saw an uptick amidst the liquidity drought, and speakers agreed that this trend is expected to continue. 

Secondaries 

SuperReturn’s “State of the Union” reinforced several popular themes: record amount of dry powder to be deployed, slowed deal making, and lack of exits, which are all contributing to the premium on liquidity in today’s market. The secondary market is posed to be one of the stronger growth vectors in 2024 and beyond. 

Volume projections for the private fund secondary market were mixed amongst speakers, ranging from $500B-$750B by the end of the decade, while Dawson doubled-down on their $1T projection. 

We touched on this topic in the closed discussion that we hosted on day 3 “The Future of Secondaries: Technology for an Evolving Market”. We believe that to get to $1T, there must be meaningful intervention from technology to address the resource constraints that bottleneck the volume of transactions that can be done. There simply aren't enough bodies to process more volume in the way deals are commonly done today. Workflow technology is a force multiplier that will allow secondary transactions to scale to these target numbers by implementing standardization, transparency, and efficiency. You can learn more about our views on this topic here: The Future of Secondaries: How NFS is Leading Innovation in the Private Fund Secondary Market.