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Global disruption could accelerate already-growing demand for impact-focused solutions
The year 2022 will certainly be remembered as momentous, and it may take some time to fully understand the ramifications of the events that occurred this year. Thankfully, the effects of the COVID-19 pandemic finally began to attenuate, although the virus has not completely disappeared. For the first time in decades, Europe had an active military conflict, and, at the time of writing, it is still unclear how that situation will be resolved. Energy prices, due to both the conflict and ensuing policy decisions, increased significantly. On the macroeconomic front, inflation returned with a vengeance and reached levels not seen in 40 years. As a result, for the first time in many investment professionals’ careers, we are seeing a significant increase in interest rates.
Any of these events individually would likely have had a profound impact on markets, both public and private. However, in combination, these events, along with other relevant factors, have certainly pulled the rug out from under markets. In our private markets outlook for 2023, we discuss how these significant events are affecting various private market segments and what we expect their ramifications to be in 2023.
We explore how recent significant events are affecting various private market segments and what we expect their ramifications to be in 2023.
1. Private Debt
Private debt: the benefits of private debt during a period of substantial uncertainty, including the flexibility the asset class offers.
2. Private Equity
Private equity - whether general partners will accelerate capital calls and commit new capital during a period of declining valuations, which could have implications for performance.
3. Real Estate
Real estate - the case for which property types are likely to perform better in the current macroeconomic climate as well as how ESG will impact the sector.
4. Venture Capital
Venture capital - argues that, historically, periods of economic distress have led to the development of next-generation technology products and services.
5. Asian Private Equity
Asian private equity - the current investment conditions in China and the potential opportunities these circumstances present.
6. European Private Equity
European private equity - despite economic uncertainty in the region, the current situation may present an opportunity to gain access to general partners who would otherwise be inaccessible.
7. Infrastructure
Infrastructure - breaks down the issue of how some, but not all, infrastructure assets can provide a degree of inflation protection.
8. Impact Investing
Impact investing - examines the growth and development of several impact-investing sectors and argues that the current market backdrop may offer a good opportunity to consider an impact-investing program.
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