BlackRock Global Private Markets Survey 2023: 24% Allocated to Private Markets by Pensions, Insurers, Family Offices & SWFs, Top 3 Goals are Income Ge

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BlackRock Global Private Markets Survey 2023: 24% Allocated to Private Markets by Pensions, Insurers, Family Offices & SWFs, Top 3 Goals are Income Generation, Capital Appreciation & Better ESG, Top 3 Increase in Allocation for 2023 are Private Equity, Private Credit & Multi-Alternative Solutions

29th April 2023 | Hong Kong

BlackRock has released the BlackRock Global Private Markets Survey 2023, providing key insights into senior executives responsible for private markets allocations from more than 200 institutions with a total of $15 trillion AUM (Assets under Management) and $3.2 trillion invested in private markets.  The 200+ senior executives are from public pensions, corporate pensions, insurers, family offices, foundations & endowments, and sovereign wealth funds.  Global portfolio allocation to private markets for 200+ institutions is 24% (Rest of portfolio: 76%), with the top 3 goals for allocation to private markets are Income generation, Capital appreciation, and Better ESG demonstration.  The top 3 planned increase in private asset allocations in 2023 are Private Equity, Private Credit, Multi-Alternative Solutions.  The top 3 opportunities in Private Credit are Infrastructure, real estate debt, Distressed.  The top 3 opportunities in Infrastructure are Emerging markets, Transportation infrastructure, Renewables.  The top 3 opportunities in Private Equity are Mature companies, Venture capital, Secondaries.  The top 3 opportunities in Real Estate are Niche sectors (cold storage, data centers, life-sciences, etc.), Residential (multi-family and private rental), Sustainability trends.  The top 3 barriers to private markets are Illiquidity / capital lockup, Internal stakeholder buy-in, Inappropriate legal structures &/or operational set-up.  The top 3 considerations to select private markets manager are Access to opportunities, Investment strategy, Expertise across asset classes &/or regions.  See below for key summary & findings from the BlackRock Global Private Markets Survey 2023.  

“ 24% Allocated to Private Markets by Pensions, Insurers, Family Offices & SWFs, Top 3 Goals are Income Generation, Capital Appreciation & Better ESG, Top 3 Increase in Allocation for 2023 are Private Equity, Private Credit & Multi-Alternative Solutions “

 

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BlackRock Global Private Markets Survey 2023 London, United Kingdom BlackRock Global Private Markets Survey 2023

Key Findings 

• Global portfolio allocation to private markets – 24% (Rest of portfolio: 76%)
• Top 3 goals for allocation to private markets – Income generation, Capital appreciation, Better ESG demonstration
• Top 3 increase in private asset allocations in 2023 – Private Equity, Private Credit, Multi-Alternative Solutions
• Top 3 opportunities in Private Credit – Infrastructure, real estate debt, Distressed
• Top 3 opportunities in Infrastructure – Emerging markets, Transportation infrastructure, Renewables
• Top 3 opportunities in Private Equity – Mature companies, Venture capital, Secondaries
• Top 3 opportunities in Real Estate – Niche sectors (cold storage, data centers, life-sciences, etc.), Residential (multi-family and private rental), Sustainability trends
• Top 3 barriers to Private Markets – Illiquidity / capital lockup, Internal stakeholder buy-in, Inappropriate legal structures &/or operational set-up
• Top 3 considerations to select Private Markets Manager – Access to opportunities, Investment strategy, Expertise across asset classes &/or regions

 

1) Private Markets Portfolio Allocation

Global Portfolio Allocation

Private Markets – 24%

Rest of Portfolio – 76%

Percentage of portfolio allocated to private markets 

Asia-Pacific (APAC) – 27%

Europe, Middle East & Africa (EMEA) – 16%

United States & Canada – 28%

 

2) Goals on allocation to Private Markets

Most important factors on allocation to private markets (Global)

Income generation – 82% 

Capital appreciation – 58%

Better ESG demonstration – 43%

Risk diversification – 42%

Less volatility – 16%

Asia-Pacific (APAC):

Income generation – 84% 

Capital appreciation – 62%

Better ESG demonstration – 54%

Risk diversification – 35%

Less volatility – 8%

EMEA (Europe, Middle East & Africa):

Income generation – 87% 

Capital appreciation – 19%

Better ESG demonstration – 39%

Risk diversification – 46%

Less volatility – 9%

United States & Canada:

Income generation – 78% 

Capital appreciation – 50%

Better ESG demonstration – 73%

Risk diversification – 43%

Less volatility – 25%

 

3) Increase in allocation to private assets in 2023

Increase to private asset classes allocations in 2023:

Private Equity – 72% to increase

Private Credit – 52% to increase

Multi-Alternative Solutions – 52% to increase

Real Estate – 51% to increase

Infrastructure – 46% to increase

 

4) Opportunities in Private Markets

Biggest Opportunities in Private Credit

Infrastructure / real estate debt – 51%

Distressed – 50%

European direct lending – 48%

Opportunistic – 43%

Venture debt – 42%

United States direct lending – 40%

Biggest Opportunities in Infrastructure

Emerging markets – 51%

Transportation infrastructure – 47%

Renewables – 37%

Digital infrastructure – 32%

Biggest Opportunities in Private Equity

Mature companies – 56%

Venture capital – 40%

Secondaries – 39%

Buyouts – 34%

Biggest Opportunities in Real estate

Niche sectors (cold storage, data centers, life-sciences, etc.) – 55%

Residential (multi-family and private rental) – 55%

Sustainability trends – 50%

Demographic trends – 49%

Industrial & logistics – 40%

Office – 26%

 

5) Key Considerations 

Main barriers in allocating assets to private markets 

Illiquidity / capital lockup – 49%

Internal stakeholder buy-in – 41%

Inappropriate legal structures &/or operational set-up – 33%

Expertise of/comfort with the asset class – 32%

Risk profile of private assets – 29%

Ability to deploy capital – 27%

Regulation – 23%

Transparency/Data quality – 23%

Valuation issues – 21%

Selecting private markets manager 

Access to opportunities – 45% 

Investment strategy – 42% 

Expertise across asset classes &/or regions – 40% 

Environmental, social or governance approach – 37% 

Existing relationship with the manager – 35% 

Reputation of manager – 31% 

Manager’s track record – 31% 

Specialized focus – 27% 

 

6) Foreword – Rising to meet investor needs 

Welcome to the first BlackRock Alternatives Global Private Markets Survey. Over the past 20 years, we have seen private markets grow from a niche category with roughly US$700 billion in assets to a cornerstone of many portfolios, worth more than US$13 trillion.  For many investors, private credit, private equity, infrastructure and real estate are no longer considered alternative but, in fact, a core component of the modern investment portfolio. And while private markets have experienced an extended period of rapid growth, these asset classes are not immune to the conditions that have been impacting their public market counterparts over the past year or so.   Against this backdrop, we surveyed capital allocators across the globe to understand how they are constructing their portfolios in the new regime. 

We learned that investors believe short-term uncertainty isn’t enough to derail the growth of private markets. While the recent banking turmoil has raised new concerns among investors, the conversations I’ve had suggest that clients are focused on navigating the current cycle with caution and care, albeit with an eye towards capturing opportunities. Even amid heightened volatility and uncertainty, investing in areas such as renewable energy, mature private companies and direct lending – venture and middle market debt in particular – can provide a ballast to portfolios. 

Sophisticated investors have long abandoned the 60/40 asset allocation model. Among our respondents, private assets represent an average 24% of portfolios. Income generation is a key allocation driver – cited by 82% of those we surveyed. The search for yield in the years since the global financial crisis, as interest rates hit historic lows, is a familiar story. The survey results tell us, however, that even with rates rising and worries about a possible recession this year, institutions continue to see private assets as essential tools to help meet their income needs. 

In the following pages, we detail where respondents see the biggest opportunities across private asset classes, explore their priorities when accessing the markets and explain what they look for when choosing their investment managers.  We’d like to thank the investors around the world who took the time to participate in the survey. And we hope that you find the results both insightful and useful. 

Edwin Conway
Global Head, BlackRock Alternatives 

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