Private equity has become hazardous terrain for investors

THE rise and rise of private markets has a feeling of inexorability about it. Despite increased financing costs and an uncertain growth outlook, private market assets under management totalled US$13.1 trillion on Jun 30 last year, having grown at nearly 20 per cent a year since 2018, according to consultant McKinsey.

While fundraising has declined from its 2021 peak, a recent survey by State Street found that a majority of institutional investors intended to increase their exposure to almost all private markets, including infrastructure, private debt, private equity and real estate.

Yet the boom in private markets since the 2007 to 2009 financial crisis, especially in the big buyout category, was built on ultra-loose monetary policy.