As conditions continue to tighten, the public alternative asset managers “remain optimistic and feel their respective firms are in a good position to take advantage of opportunities that will present themselves over the next several quarters,” according to an update from Pitchbook.
The Pitchbook report further noted that most managers noted that “the fundraising market is more challenging now than in previous quarters.” However, these alternatives managers’ strong brands and consistent results “have helped them grow their market share in a flat fundraising market this year.”
The report added that performance “was a mixed bag in Q3: Blackstone and Apollo both marked their portfolios down by 0.3%, and KKR marked their portfolio down further by 4%, while Ares and Carlyle saw their PE portfolios appreciate by 2.7% and 1%, respectively.”
The Pitchbook report also mentioned that “with muted PE results, many firms emphasized other fund strategies, with credit, real estate, and real assets attracting more interest as market conditions worsened for traditional leveraged equity investing.”
The report further revealed:
“With persistent inflation and higher interest rates, these other strategies have led the way in fundraising for these public managers. Floating rate debt on the credit side and real estate assets with rents that are outpacing inflation have led to solid returns, while PE sees relatively flat returns. Firms that remain diversified in different asset classes have held up best and should continue to see a variety of opportunities for the coming quarters, both in terms of fundraising and deployment.”
The report pointed out that fundraising “remained strong, but firms acknowledged that the fundraising environment has become more challenging.”
These powerhouses, however, “continued to see strong capital inflows thanks to strong brand loyalty and track records.” This year, 76% of US PE fundraising “went to the top 35 PE funds on the year, up from 40% last year.”
The report also mentioned:
“The managers also noted that while the fundraising market remains crowded for large buyouts, there are plenty of opportunities in other strategies. Additionally, these firms possess near-record dry powder, which they feel is advantageous, despite the current environment of dislocation and fewer financing options.”
The report from Pitchbook further noted:
“They are confident that high levels of dry powder allow them to find ways to still get deals done while others may struggle. AUM and fee-generating AUM (FGAUM) ticked up as assets continued to flow across various asset class strategies and geographies. This is expected to continue as markets such as Asia, and strategies such as credit, garner more attention from investors.”
