The year 2020 was turbulent for private markets, as it was for much of the world. Meanwhile, diversity and new ways of working are central to a changing business environment. Private markets rebounded in 2020 after a turbulent first half, but performance varied by investment type.
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Leading firms continue to make major investments in digital and analytics capabilities across both front and back office to capture economies of scale as they grow.ĭownload Private markets rally to new heights to read the full report on which this article is based (PDF–9.0MB). Key lessons emerge as firms accelerate investment in digital and analytics. However, ethnic diversity is not yet broad-based, and diversity in general is lacking in the most senior roles, suggesting that firms continue to miss opportunities. US PE firms have increased the percentage of ethnically diverse talent and women holding junior-level roles, and have made strides in female promotion and retention. Private markets firms are making progress on diversity, but work remains.
Considering climate risk in underwriting is now an imperative firms that do not run the risk of mispricing their investments. Firms can create value by transforming unsustainable business models into green ones and investing in companies scaling decarbonization technologies. Investors have become particularly focused on environmental sustainability, a potential win–win for private markets investors who support positive impact while driving returns. GPs and LPs continued to formalize environmental, social, and governance (ESG) commitments in 2021: over half of total fundraising-the highest percentage ever-flowed to firms with formal policies. The sustainability transition presents opportunities and risks-both substantial. Capital is increasingly flowing into subsectors that support the energy transition and digitization, such as alternative energy, clean-tech solutions focused on improving environmental sustainability, and “infratech.” Investors are also looking beyond physical assets at operating companies and technologies to generate value. Over the past decade, infrastructure’s mandate has evolved. In 2021, infrastructure and natural resources set all-time highs for fundraising, AUM, and deal volume indeed, global AUM broke the $1 trillion mark for the first time. Please email us at: than roads and bridges.
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