Private markets have become increasingly integral to financial markets and the real economy, according to the research. The number and breadth of private equity-sponsored companies has grown and the versatility of private credit has transformed it into a competitive source of funding for the leveraged finance market.
While rising rates may expose hazards in both private and public credit markets, it is expected that the private markets will remain an integral source of funding for the future, meeting the needs of new and innovative growth models as well as those of traditional large corporate M&A.
Key findings from the Look Forward: Private Markets research include:
- Global private equity- and venture capital-backed M&A investments peaked in 2021, at over $600 billion and even after a 35% pull-back in 2022 remained elevated at over $400 billion.
- Private equity buyers led seven of the 10 biggest information technology M&A deals in the US and Canada last year, the highest share recorded in the past 22 years.
- Private equity's enormous arsenal of dry powder means there is significant capital to deploy in the right conditions, the question is about its willingness to do so.
- $260 billion has been raised for private equity funds targeted to fund the energy transition, including funding that may impact the speed and shape of the transition even more than funding from public markets.
"Private markets have moved off the sidelines and into the spotlight across multiple industries and sectors. While public markets remain essential to the global economy, many companies today have grown to dominant market positions without ever engaging with public financing," said Adam Kansler, President of S&P Global Market Intelligence. "Whether we are talking about private debt or private equity, venture capital or energy infrastructure, the scale of private market financing has reached a point where knowledge of these markets is essential."
The Look Forward research series from the S&P Global Research Council aims to provide a deep dive into the most important themes that are transforming the global economy, helping decision-makers look beyond the near term and explore the trends that will shape our future.
"In a rapidly changing world in which markets transform and evolve at a pace never seen before, new risks and opportunities are constantly emerging, and established wisdom is continually challenged," said Martina Cheung, President of S&P Global Ratings and Executive Sponsor of the S&P Global Research Council. "The Look Forward journal exemplifies the role of S&P Global in powering global markets and provides the perspectives our customers need to focus on the future."
For more insights from Look Forward Private Markets (Volume 2 | April 2023), please visit: https://www.spglobal.com/look-forward/private-markets
For more information about S&P Global Research Council, please visit:https://www.spglobal.com/en/research-insights/featured/research-council
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SOURCE S&P Global