Private wealth is ‘phenomenal opportunity’ for alternative fundraising
Private wealth represents “a phenomenal opportunity for the alternatives industry” as it is increasingly being used to fund alternative investments, according to new research.
A report from alternative assets data company Preqin found that “an increasing number of fund managers are pivoting towards the private wealth industry, as capital raising from institutional clients has become more challenging”.
It said that the private wealth industry “appears to be the part of the market with the most traction”, representing “a phenomenal opportunity for the alternatives industry.”
Preqin pointed to a favourable regulatory backdrop as one of the main drivers for the growth in private wealth financing.
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It believes fund managers will be reassured by “the proactive stance of regulators across the world, which is broadening access for individual investors and increasing the number of suitable fund vehicles in the market”.
In 2022, the US Securities and Exchange Commission (SEC) put new rules in place designed to improve access to markets and protections for individual investors. Preqin said it expected regulators in Europe and Asia to follow the SEC’s lead.
And the European Long-Term Investment Fund (ELTIF) 2.0 and the UK’s Long-Term Asset fund (LTAF) promise to offer fund managers greater flexibility in raising capital from individual investors.
The study found that alternative investment management company Blackstone raised $48bn (£39bn) from private wealth in 2022, while private equity firm Apollo Global Management aims to raise $50bn of retail capital between 2022 and 2026.
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“Global private capital has seen over a trillion dollars in inflows from institutional investors for several years in a row,” the report said. “However, the environment is becoming increasingly challenging for raising capital as more investors approach their long-term strategic asset-allocation targets and face economic headwinds.”
Preqin analysts forecast that institutional global private capital fundraising will grow to $1.58tn by 2027, with a 3.57 per cent compound annual growth rate.
“Most fund managers are so far only scratching the surface compared with the potential that the private wealth space offers,” said Cameron Joyce, Preqin deputy head of research insights. “We are seeing larger fund managers leverage scale and their brand to raise capital directly from high-net-worth individuals. However, the emergence of tech-driven intermediaries in the space promises to allow a much wider array of fund managers to diversify their investor base.”
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