“Geopolitical risks and rising long-term bond yields are two of the factors behind more moderate fundraising activity and performance expectations,” said Cameron Joyce, senior vice president, head of private equity at Preqin. “In spite of these challenges, the industry is expected to show solid growth until 2028, thanks to a gradual recovery in fundraising activity.” Photo: Provided by Preqin

“Geopolitical risks and rising long-term bond yields are two of the factors behind more moderate fundraising activity and performance expectations,” said Cameron Joyce, senior vice president, head of private equity at Preqin. “In spite of these challenges, the industry is expected to show solid growth until 2028, thanks to a gradual recovery in fundraising activity.” Photo: Provided by Preqin

Global alternatives assets under management are expected to increase to $24.5trn by the end of 2028, says Preqin’s Future of Alternatives 2028 report.

Data company Preqin on 17 October published its , which includes industry forecasts for the next five years. It expects to see global alternatives assets under management (AUM) reach $24.5trn in 2028, compared with an estimated $16.3trn at the end of 2023. This represents an annualised growth rate of 8.4% from 2022 to 2028 (down from 12.3% for the period from 2016 to 2022), noted Preqin in its report.

“Geopolitical risks and rising long-term bond yields are two of the factors behind more moderate fundraising activity and performance expectations,” said Cameron Joyce, senior vice president, head of private equity at Preqin in a press release from the firm. “In spite of these challenges, the industry is expected to show solid growth until 2028, thanks to a gradual recovery in fundraising activity. Softer investor sentiment is creating opportunities in direct lending, secondaries and real assets in particular. The longer-term fundamentals behind the growth of the private markets remain broadly intact, while the market continues to evolve rapidly.” 

Here are a few takeaways from the report.

Private equity expected to exceed $8.5trn by 2028

Preqin forecasts that total private equity AUM will reach $8.5trn by 2028, an annualised growth rate of 10% from 2022 to 2028. North America has the lion’s share of these assets.

In Europe, AUM is expected to grow from $1.0trn at the end of 2022 to $1.6trn in 2028. This is a growth rate of 8.4%, down from 12.2% during the 2016 to 2022 period, and is due to challenging macroeconomic conditions and geopolitical tensions.

Europe private equity fundraising is forecast to climb from $112.7bn at the end of 2023 to $144.5bn in 2028 (a 9.6% annualised growth rate).

Industry dry powder is expected to exceed $2.0trn in 2028, which represents 23.6% of AUM, said Preqin.

Europe-focused VC assets under management to double

Preqin expects venture capital AUM for 2027 to stand at $3.5trn, down from $4.2trn in a previous forecast. For 2028, venture capital AUM is expected to reach $3.8trn, bringing its compound annual growth rate forecast for 2022 to 2028 to 14.2% (down from 19.1%).

North America is predicted to have the highest growth rate worldwide, despite worse-than-expected growth when compared to last year’s forecast.

European VC assets under management are expected to more than double in the next few years, growing from $193bn at the end of 2022 to $436bn in 2028.

Total dry powder is expected to fall as a proportion of AUM, then rebound in 2026.

Private debt outlook remains bright

Preqin expects private debt AUM to reach $2.8trn in 2028, nearly doubling the 2022 figure ($1.5trn).

Europe AUM is forecast to grow at a rate of 13.6%.

Direct lending, which is predicted to remain the largest part of private debt, is forecast to show the strongest growth. The data firm added that it expects to see the “greatest increase in performance” from distressed debt.

Real estate investments to be “hampered”

Preqin expects real estate investments to be “hampered” by high interest rate worries, lower office demand and pricing discrepancies. Global private real estate AUM are predicted to reach $2.2trn in 2028 (an annualised growth rate of 6.2% between 2022 and 2028).

In Europe, the annualised growth rate is forecast to be 2.7%.

Europe to overtake North America in infrastructure

Preqin expects global infrastructure assets under management to reach $1.7trn by 2028, with a compound annual growth rate of 7.4% for 2022 to 2028. This “subdued” rate is due to downward revisions in fundraising and performance. “Tightening credit markets are constraining debt affordability, while lingering inflation is creating uncertainty on the deliverability of the energy transition in key markets,” explained the data firm in its report.

The AUM of Europe-focused funds is expected to overtake that of North American funds in 2026. Preqin also predicts that Europe will have the highest compound annual growth rate (11.6%) of any major region.

“The long-term prospect of the energy transition offers arguably more opportunity to infrastructure than any other asset class,” said Preqin. “However, in the short term, high interest rates and embedded inflation bear down on the return prospects for deployment into primary deals.”

Find Preqin’s full “Future of Alternatives 2028” report .

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