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US Private Equity Key Insights for Wealth Managers in 2024

US Private Equity Key Insights for Wealth Managers in 2024

US Public PE and GP Deal Roundup.
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Contents
Introduction

As 2024 advances, the private equity (PE) landscape continually evolves, with its challenges and opportunities for wealth managers and investors. The Q1 2024 US Public PE and GP Deal Roundup from PitchBook offers comprehensive insights into the US private equity market.

PE Performance: Stability Amid Market Fluctuations

In the first quarter of 2024, the top seven US-listed alternative managers reported a median gross return of 2.4% for the quarter and 8.8% on a trailing twelve-month (TTM) basis. Despite market volatility, these returns indicate a stable performance for PE funds and strategies. KKR emerged as the top performer with a TTM gross return of 19.2%, followed closely by Blackstone at 12.7%.

 

PE median gross return

 

Private credit returns outpaced PE’s, with a median quarterly gross return of 3.9% and a TTM gross return of 17.2%. This significant outperformance highlights the growing attractiveness of private credit as an investment strategy.

Gross private credit returns/appreciation by manager

Deployment Trends: Active despite the decline 

The deployment of PE capital experienced a marked decline in Q1 2024, with activity dropping by 54.5% from Q4 2023. This seasonal trend mirrors similar patterns observed in previous years. Blackstone, TPG, and KKR were notably active despite the decrease, deploying substantial capital to PE strategies. Blackstone, for instance, deployed $3.4 billion in Q1, reflecting a strategic increase year-over-year.

In contrast, private credit deployment continued its upward trajectory, increasing by 3.9% quarter-over-quarter and 137.1% year-over-year. Apollo led the charge in this space, originating $40.0 billion in debt during the quarter. 

Realizations: Return of Capital and Exit Environment

Realizations, or the return of capital to investors from the sale of portfolio companies, remained challenging for PE managers. The median TTM realization fell to $7.7 billion by the end of Q1 2024, reflecting ongoing difficulties in the exit environment. Despite these challenges, Blackstone led with the highest PE realizations at $2.5 billion, followed by Apollo at $2.4 billion.

To navigate this challenging landscape, GPs are employing innovative strategies to monetize portfolio companies. These include selling appreciated stock from prior exits and demonstrating adaptability in maximizing returns for investors even amidst market uncertainties.

TTM PE deployment ($B) by manager

Fundraising Activities: Dominated by Private Credit

Fundraising dynamics in Q1 2024 were dominated by private credit, which captured a substantial 69.8% share of total inflows. This marked a significant growing investor appetite for credit strategies. PE fundraising also increased year-over-year despite the absence of significant flagship funds. Blackstone, KKR, and Apollo emerged as the top fundraisers, showcasing their strong market positioning and investor confidence.

PE fundraising

Alternative asset managers: Embracing Growth Segments & Diversification

Alternative asset managers are expanding their horizons, tapping into new growth segments such as infrastructure, real estate debt, APAC credit, and secondaries. Ares, for instance, has been building out new investment platforms over the past several years, positioning itself for sustained growth. Wealth managers should consider these emerging segments as they present new avenues for investment and diversification.

Conclusion

By leveraging the Q1 2024 performance data, deployment trends, and strategic shifts highlighted in the report, you can better navigate your investment choices in the market and unlock value for your clients.

For a more in-depth analysis, refer to the Q1 2024 US Public PE and GP Deal Roundup report.

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