Three takeaways from the Nasdaq Private Fund Trends Report 21/22
by Andrés Ramos, Content Marketing Specialist – Nasdaq Private Fund Solutions
New private markets report
Nasdaq recently published the Nasdaq Private Fund Trends Report 21/22 which explores the top private markets themes from 2021 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 2022.
Here are three key takeaways from the report:
Public pension plan allocators returned to the private markets in 2021
Despite the continuation of virtual fundraising from 2020 into 2021, one feature of the previous year’s fundraising environment that was less prevalent in 2021 was the number of public pension plan allocators staying on the sidelines.
Across the private markets 228 unique public pension plans reported commitments to private funds in the year, a 17% increase from 2020. In total, these allocators reported $190.8 billion in commitments, a 18% YoY increase. This data suggests that public plans have abandoned the “wait and see” approach that plagued 2020 or are increasingly bullish on the private markets. The true driver of the momentum is likely a mix of the two trends, both of which are positive for GPs fundraising in 2022.
ESG becoming a bigger part of public plan commitments
ESG is quickly becoming a perennial theme within the private markets which points to the growth of its importance to both LP allocators and fund managers. Private markets funds pursuing ESG strategies raised over $4.8 billion from public plan allocators tracked by Nasdaq eVestment in 2021.
Top strategies where public plans reported commitments included energy transition, sustainable infrastructure, and affordable housing. Notable fund managers raising ESG focused funds in 2021 included BlackRock, The Carlyle Group, Kayne Anderson, and TPG Capital.
While ESG specific funds tend to be in real estate or real assets, more GPs in private equity and private debt are incorporating ESG criteria in their core investment strategies, a trend that is sure to continue moving into 2022.
Real estate commitments come roaring back
2021 was an excellent year for real estate fundraising as total dollar commitments from public plans reached $41.0 billion, a 59% increase from the previous year.
After a slow start to the year in 1Q 2021 which mirrored levels seen through 2020, commitment activity from public plans spiked to $12.0 billion in 2Q 2021 and remained elevated through the remainder of the year with commit totals of $11.1 billion and $10.8 billion in 3Q 2021 and 4Q 2021 respectively.
The flurry of activity from public pension plans suggest that they now feel more comfortable with the outlook for real estate, which was perhaps the hardest hit private markets asset class during the height of the pandemic.