Three Takeaways from the Nasdaq Private Fund Trends Report 2022/2023
by Andrés Ramos, Content Marketing Specialist – Nasdaq Private Fund Solutions
New private markets report
This month Nasdaq published the Private Fund Trends Report 22/23 which 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 highlights the top GPs and LP allocators from the year while also delivering forward-looking insights on private markets fundraising in 2023.
For private fund managers the report provides a valuable look at overall investment activity in the industry and market intelligence on both the pension plans they can target on the fundraising trail and the competitors who may also be in the market raising capital.
Here are three key takeaways from the report:
Public Plan Commitment Activity Plateaus
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. This plateau of commitment activity comes on the back of consecutive years of double-digit percentage growth from 2019 to 2021.
Total dollar reported commitments to private equity funds from public pension plans decreased 2.6% YoY to $88.4 billion in 2022. Private debt funds also saw a small decrease (-1.4%) in commitment activity from 2021 to 2022. Total dollar commitments reached $39.7 billion in the year.
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.
While 2022 wasn’t the strongest year for private debt, anecdotal evidence suggests that 2023 will be a big year for the asset class. According to data from Nasdaq eVestment, 29 private debt funds seeking a total of $49.7 billion in commitments are confirmed to be in market for a first close in 2023. Direct lending funds represent $28.5 billion (57.4%) of the overall fundraising total sought by private debt managers and on average are seeking to raise $2.0 billion.
Real Assets was a Bright Spot
By historical standards 2022 was an excellent year for real assets funds as the asset class saw total reported dollar commitments reach $30.5 billion, a 16.9% increase from 2021. The number of commitments reported also saw a strong 26.7% YoY increase.
As interest in sustainable energy funds and inflation-resistant strategies like infrastructure continue to grow, real assets fund managers are likely to see continued inflows from public plans in 2023.
