The Performance and Outlook of Private Equity in 2024

As we approach the end of 2024, private equity continues to appeal to investors seeking diversification beyond traditional asset classes. Despite facing challenges throughout the year, especially with rising interest rates, private equity still presents promising opportunities. Capital Engine® examines the latest insights from J.P. Morgan Global Research, highlighting what investors should know about the performance and outlook of private equity for the remainder of 2024 and beyond.

Performance of Private Equity in 2023: A Year of Mixed Results

In 2023, private equity investments encountered difficulties due to persistent inflation and elevated interest rates. These conditions created challenges, especially for funds with older vintages, burdened by higher leverage ratios. Investments at lower interest rates struggled to adapt, resulting in mixed returns across the asset class.

Despite these obstacles, J.P. Morgan notes that fundraising remained robust. The capital raised in 2023 mirrored pre-pandemic levels, signaling sustained investor demand for private equity exposure. This solid performance sets the stage for a more optimistic outlook for 2024.

Outlook for 2024: Key Opportunities and Challenges

As we near the close of 2024, private equity remains cautiously optimistic. J.P. Morgan’s research points to several key opportunities for investors:

1. Sectoral Strengths: Private equity continues to thrive in business-to-business (B2B) services, manufacturing, and clean energy sectors. These industries are well-positioned to benefit from reshoring efforts and the global emphasis on decarbonization, making them attractive targets for investment.
2. Newer Vintages: Funds launched more recently are expected to outperform in this environment. With a better understanding of current interest rates and more realistic valuations, newer vintages are poised for solid performance, unlike their older counterparts.
3. Long-Term Growth Potential: Investors with a long-term perspective can capitalize on sectors with structural growth trends. Clean energy remains a focal point as governments and businesses ramp up sustainability efforts.

Challenges Ahead

Despite the opportunities, private equity still faces certain risks. The biggest challenge is the potential for sustained high interest rates, which could hinder returns for highly leveraged funds. Additionally, competition for deals is expected to intensify in high-growth sectors like energy and technology, possibly compressing returns. That said, private equity remains an appealing asset class for those seeking diversified, long-term investments in a rapidly evolving global market.

While 2024 has presented both opportunities and challenges for private equity investors, the asset class remains resilient. Sectors aligned with global trends such as clean energy and manufacturing continue to offer growth potential. Selecting the right funds and sectors will be crucial for investors aiming to thrive in this dynamic environment.

Check out Capital Engine® Private Markets

About Capital Engine®
Capital Engine® provides forward-thinking organizations with efficient and scalable private capital and investor management solutions, for both traditional and digital assets.

Built for high-performance capital raising, our technology helps leverage the opportunity to better originate and showcase a diverse selection of private investment deals and offer these to investors i.e. a deal’s potential viability can be better assessed, market appetite determined and transaction promptly closed.

Our clients include broker dealers, family offices, wealth managers, incubators, accelerators, social impact and real estate funds, in providing customized SaaS solutions to power private capital and alternative investment platforms, with a strong focus on investor management services. 

Interested in Raising Capital 

Request a Call / Demo