Key Takeaways
- • Deloitte's Global Private Equity AUM model projects two scenarios for PE assets under management through 2028, with exit activity as the primary swing factor.
- • In the slow-growth scenario, public IPO exits stay at 3% to 5.5% of PE exits, global exit value falls to about US$400 billion by 2028, and dry powder rises to US$1.6 trillion.
- • In the fast-growth scenario, IPO exits (public and private) reach 40% of PE exits by 2028, distributions climb at a 25% annual rate from US$386 billion in 2023 to nearly US$1.2 trillion, and total AUM reaches US$11.5 trillion.
- • Deloitte identifies the US$3.8 trillion opportunity as the gap between the scenarios, with liquidity innovation such as private IPOs, midlife coinvesting, continuation funds and NAV loans positioned as key levers.
- • Coinvesting volume fell from a record US$260 billion in 2021 to about US$83 billion in 2023, while continuation funds in North America and Europe rose 48% in the first half of 2024.
Summary
Deloitte's Center for Financial Services has modeled how private equity assets under management could grow over the next five years, finding that the pace of exits will largely determine the trajectory. The model contrasts a slow-growth scenario, in which public IPO exits remain near historical lows of 3% to 5.5% of all PE exits and private IPOs fail to become a meaningful alternative, with a fast-growth scenario in which public and private IPOs account for 40% of PE exits by 2028, up from 15% in 2024.
In the slow scenario, the liquidity squeeze seen from 2022 to 2023 persists through 2028. Global exit value could fall to about US$400 billion, distributions could return to levels last seen before 2011, and fundraising growth is expected to slow to 1.5% per year. Dry powder would rise to US$1.6 trillion. Deloitte describes this as a possibly unlikely outcome but one that shows the importance of liquidity events for limited partners.
The fast scenario assumes high public valuations persist and private IPO structures become widespread. Distributions are projected to climb at a 25% annual rate from US$386 billion in 2023 to almost US$1.2 trillion in 2028. Fundraising could exceed US$1.5 trillion in 2028, with dry powder reaching record levels of US$3.6 trillion and total AUM reaching US$11.5 trillion. Deloitte notes early signs of recovery: PE-backed IPOs in the first half of 2024 surpassed the value of the previous two years combined, and in Europe 13 PE-backed companies listed in the first half of 2024 versus 15 in all of 2023. Still, US and European IPO markets remain well below 2021 records.
Exit activity in the first half of 2024 remained below 2023 levels by both value and count globally, though the average size of PE-backed exits rose 21% in Europe and 47% in the United States compared with the 2023 average. Deloitte points to midlife coinvestments, in which LPs invest directly in specific portfolio companies, as one liquidity tool. Sovereign wealth funds took about half of global coinvesting value in the first half of 2024 but participated in only 10% of deals, while corporates accounted for about a third of value and were involved in about 66% of deals. Continuation funds are also growing, with 49 announced or completed in North America and Europe in the first half of 2024, up 48% year on year. Deloitte cautions that the SEC's 2025 examination priorities will focus on conflicts of interest and adviser-led secondary transactions.
NAV loans, revolving credit facilities backed by fund portfolios, are increasingly being used to distribute cash to LPs. The Fund Finance Association estimated the NAV facilities market at about US$100 billion in 2022, and some participants expect it to reach US$600 billion by 2030. Deloitte also highlights private IPOs, including EQT's exploration of the structure for top-performing holdings and Nasdaq Private Market's plans to offer a platform for divesting stakes to institutional investors, as emerging exit routes.
In the slow scenario, the liquidity squeeze seen from 2022 to 2023 persists through 2028. Global exit value could fall to about US$400 billion, distributions could return to levels last seen before 2011, and fundraising growth is expected to slow to 1.5% per year. Dry powder would rise to US$1.6 trillion. Deloitte describes this as a possibly unlikely outcome but one that shows the importance of liquidity events for limited partners.
The fast scenario assumes high public valuations persist and private IPO structures become widespread. Distributions are projected to climb at a 25% annual rate from US$386 billion in 2023 to almost US$1.2 trillion in 2028. Fundraising could exceed US$1.5 trillion in 2028, with dry powder reaching record levels of US$3.6 trillion and total AUM reaching US$11.5 trillion. Deloitte notes early signs of recovery: PE-backed IPOs in the first half of 2024 surpassed the value of the previous two years combined, and in Europe 13 PE-backed companies listed in the first half of 2024 versus 15 in all of 2023. Still, US and European IPO markets remain well below 2021 records.
Exit activity in the first half of 2024 remained below 2023 levels by both value and count globally, though the average size of PE-backed exits rose 21% in Europe and 47% in the United States compared with the 2023 average. Deloitte points to midlife coinvestments, in which LPs invest directly in specific portfolio companies, as one liquidity tool. Sovereign wealth funds took about half of global coinvesting value in the first half of 2024 but participated in only 10% of deals, while corporates accounted for about a third of value and were involved in about 66% of deals. Continuation funds are also growing, with 49 announced or completed in North America and Europe in the first half of 2024, up 48% year on year. Deloitte cautions that the SEC's 2025 examination priorities will focus on conflicts of interest and adviser-led secondary transactions.
NAV loans, revolving credit facilities backed by fund portfolios, are increasingly being used to distribute cash to LPs. The Fund Finance Association estimated the NAV facilities market at about US$100 billion in 2022, and some participants expect it to reach US$600 billion by 2030. Deloitte also highlights private IPOs, including EQT's exploration of the structure for top-performing holdings and Nasdaq Private Market's plans to offer a platform for divesting stakes to institutional investors, as emerging exit routes.
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