Analysis of Concentration Trends and Market Performance in Private Markets

Concentration in the private markets may be increasing as the largest General Partners (GPs) focus more on addressing non-institutional capital pools. Despite challenging fundraising environments, some managers are experiencing success in raising substantial amounts of money, leading to a concentration of commitment dollars to fewer managers. This trend is not new, as similar concentration effects were observed after previous financial crises. Large, established managers tend to attract more allocation from Limited Partners (LPs) during tough fundraising periods, leading to a natural concentration of capital over time. In 2023, there was a notable decline in the number of new funds launched, indicating a shift towards established managers. While the private equity industry remains entrepreneurial and fragmented, talented individual investors find it increasingly difficult to raise capital independently. Notably, fundraising in buyouts reached record levels, while VC fundraising experienced a significant decline. Deal volumes and performance also varied between buyouts and VC, with buyouts outperforming VC in 2023. LPs are showing a growing interest in private debt and infrastructure asset classes, with private debt demonstrating resilience in fundraising despite a minor decline. Credit managers are seizing opportunities in their traditional markets, while infrastructure fundraising faced challenges in 2023 despite strong LP interest. Overall, there is a visible trend towards concentration of capital among a smaller number of large managers in the private markets.