Nasdaq Private Fund Trends Report

    Nasdaq Fund Secondaries / Insights

    Private Fund Trends Report 2022-2023

    This report explores the top private markets themes from 2022, as well as public pension plan commitment activity from across the various private markets asset classes. The report also highlights the top GPs and LP allocators from the year while also delivering forward-looking insights on private markets fundraising in 2023.

    Report Highlights

    Despite the strong start to the year, by the end of 2022, total reported dollar commitments from public plans totaled $203.7 billion, a narrow 1.7% YoY increase from the 2021 total ($200.4 billion). The year also saw a shade fewer public pension plan investors report an allocation to the private markets, 231 versus 233.

    The Denominator Effect

    A major private markets talking point for institutional investors in 2022 was the denominator effect.

    When the public markets began to drop in the first half of the year, investors saw their private markets holdings occupy a larger overall percentage of their portfolios because private fund valuations lag public markets peers. Due to stringent portfolio governance models and target allocations, investors who were now overallocated to the private markets were forced to scale back their pacing plans for the year.

    It’s likely that these unforeseen circumstances contributed to the lack of growth in overall commitment activity from public plans to the private markets.

    Inflation and Rising Interest Rates

    Inflation and rising interest rates in 2022 drove demand from pension plans into very specific segments of the private markets. Fears of inflation combined with a long-term trend away from oil & gas energy strategies meant that allocators were targeting infrastructure strategies in their real assets portfolios.

    By historical standards 2022 was an excellent year for real assets fundraising from public pension plans. The asset class saw total reported commitments reach $30.5 billion, a 16.9% increase from 2021. The number of commitments reported also saw a strong 26.7% YoY increase.

    Secondaries

    Despite ending the year down from a high watermark in 2021, 2022 was the second-largest year on record for secondaries market activity with an overall transaction volume of $103 billion according to investment bank Evercore. In terms of dry powder, Evercore estimates that the market is sitting on a record $131 billion.

    LP-led transactions accounted for $55 billion of overall secondary transaction volume in 2022, down 16.7% from 2021. GP-led transaction volume reached $48 billion, down 29.4% YoY. That said, demand remains high for the liquidity offered by secondaries and the market will continue to grow in the long-term. Worth noting, 2022 saw LP-led overtake GP-led as the majority secondaries transaction type, a trend that will likely continue in the foreseeable future.

    Despite the strong start to the year, by the end of 2022, total reported dollar commitments from public plans totaled $203.7 billion, a narrow 1.7% YoY increase from the 2021 total ($200.4 billion). The year also saw a shade fewer public pension plan investors report an allocation to the private markets, 231 versus 233.

    The Denominator Effect

    A major private markets talking point for institutional investors in 2022 was the denominator effect.

    When the public markets began to drop in the first half of the year, investors saw their private markets holdings occupy a larger overall percentage of their portfolios because private fund valuations lag public markets peers. Due to stringent portfolio governance models and target allocations, investors who were now overallocated to the private markets were forced to scale back their pacing plans for the year.

    It’s likely that these unforeseen circumstances contributed to the lack of growth in overall commitment activity from public plans to the private markets.

    Inflation and Rising Interest Rates

    Inflation and rising interest rates in 2022 drove demand from pension plans into very specific segments of the private markets. Fears of inflation combined with a long-term trend away from oil & gas energy strategies meant that allocators were targeting infrastructure strategies in their real assets portfolios.

    By historical standards 2022 was an excellent year for real assets fundraising from public pension plans. The asset class saw total reported commitments reach $30.5 billion, a 16.9% increase from 2021. The number of commitments reported also saw a strong 26.7% YoY increase.

    Secondaries

    Despite ending the year down from a high watermark in 2021, 2022 was the second-largest year on record for secondaries market activity with an overall transaction volume of $103 billion according to investment bank Evercore. In terms of dry powder, Evercore estimates that the market is sitting on a record $131 billion.

    LP-led transactions accounted for $55 billion of overall secondary transaction volume in 2022, down 16.7% from 2021. GP-led transaction volume reached $48 billion, down 29.4% YoY. That said, demand remains high for the liquidity offered by secondaries and the market will continue to grow in the long-term. Worth noting, 2022 saw LP-led overtake GP-led as the majority secondaries transaction type, a trend that will likely continue in the foreseeable future.

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    About The Data

    All information contained in this report has been sourced from the Nasdaq eVestment Market Lens platform, with data collated in February 2023. Market Lens aggregates documents, videos, presentations and more from over 700 public pension plans in the United States, Canada, and Europe and from their investment consultants. Forward-looking fundraising data on confirmed funds is sourced from fundraising GPs and trusted media outlets while projected funds are determined using proprietary analysis from Market Lens of historical vintage year, fund size, and fund deployment data.

    All information contained in this report has been sourced from the Nasdaq eVestment Market Lens platform, with data collated in February 2023. Market Lens aggregates documents, videos, presentations and more from over 700 public pension plans in the United States, Canada, and Europe and from their investment consultants. Forward-looking fundraising data on confirmed funds is sourced from fundraising GPs and trusted media outlets while projected funds are determined using proprietary analysis from Market Lens of historical vintage year, fund size, and fund deployment data.