Private equity outperforms public equity: Hamilton Lane

private-equity-outperforms-public-equity:-hamilton-lane

Private equity investments continued a trend of outperforming public equities, according to a presentation on Thursday by Hamilton Lane Inc. HLNE, +0.84%, a specialist in private markets. Between the start of 2017 and January 2022, private markets generated a roughly 2.4x return, compared to a 1.5x return from stocks. Hamilton Lane warned of a potential asset price correction from high North American purchase price multiples, but buyout firms have actually been using less debt and paying more equity for portfolio companies. This means portfolio company balance sheets may be better protected against an economic slowdown. Private market investors may want to slow down their speed of capital deployment amid economic uncertainties tied to a 40-year-high in inflation and geopolitical events. Overall, the fundraising environment for private equity funds has been red hot in 2021 and 2022, with a spike in venture capital and growth equity investing by LPs. Distressed funds were the only category to show a drop in fundraising activity. The potential high net worth market for private market growth is nearly $80 trillion compared to total pension fund assets of $56 trillion, according to Hamilton Lane.

Source: Marketwatch

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