Almost half (49%) of investors globally consider private equity to be overvalued, rising from 46% in H1 2024, according to alternatives data and insight provider Preqin’s Investor Outlook H2 2024 report, which surveyed 185 institutional investors.
This was however lower than those surveyed on the same question in Preqin’s June 2023 and June 2022 surveys (53% and 66% respectively).
Some 45% believe private equity will perform better over the 12 months from this June, compared to 26% for the 12 months from June 2023. Meanwhile, more than a third (35%) plan to commit more capital to private equity and 48% intend to commit the same amount of capital in the 12 months from June 2024.
A majority (80%) considered the current exit environment to be a challenge for private equity returns generation, aligning with 57% considering secondaries to be the best opportunities in the next 12 months, as of June.
In terms of targets, over two-thirds (65%) of investors plan to target pooled single-manager funds — up from 59% in the previous period — with co-investments coming second at 52%.
Regionally, a majority (87%) pinpointed the US as having the best opportunities. Within emerging markets, India was cited by 58%, up from 45% in the previous period.
Victoria Chernykh, AVP, Research Insights at Preqin, who authored the report, commented: “Investors are increasingly optimistic about the short-term outlook for private equity. The percentage of respondents expecting a decline in performance over the next 12 months has halved for the second consecutive year, reaching 12% in our latest survey. These investors consider that the impact of interest-rate hikes on the asset class’s returns is now reflected in the pricing.”
