Mackenzie Investments Releases Inaugural Private Markets Outlook

The report forecasts a rise in private market investment opportunities across private equity, private credit and private infrastructure resulting from the benefits companies perceive in remaining private for longer, and the growing investment requirements and need for private capital to support infrastructure projects critical to modernizing economies. In addition, recent volatility in the public markets has investors looking beyond traditional investment options for products that can provide enhanced alpha potential and increased diversification. The report forecasts that these factors will continue to drive investor appetite for private market investments.

“With the recent volatility in the broader public markets, we expect to see accelerated growth in the private markets given the growing range of accessible, compelling investment opportunities, many of which are still largely untapped by individual investors,” said Allan Seychuk, Vice President, Alternatives, Mackenzie Investments. “As the markets evolved in recent years, new fund structures have been created that are now more suitable to individual investors, resulting in expanded investment opportunities.”

In the Private Markets Outlook, experts from Northleaf identify three key themes they believe will offer compelling mid-market opportunities for investors moving forward:

Notable Growth Expected for Private Equity and Mid-Market Secondaries

The private equity secondary market has seen continued growth in transaction volumes in 2023 and the first half of 2024.  This is in part due to a slower M&A environment resulting in longer holding periods for mature private equity portfolios. This trend is driving more institutional investors to seek liquidity solutions to fund further growth investment opportunities and manage portfolio risk. Interestingly, even with this growth, secondaries currently account for less than five per cent of the overall private equity market, suggesting ample opportunity ahead.

Growing Opportunity in Private Credit

As banks continue to move away from lending to private companies due to increasing regulatory restrictions, private lenders may see a significant investment opportunity as they can provide the flexible capital solutions many of these borrowers require to grow their businesses. Private credit lending has historically offered investors a return premium to many public fixed income investments, with strong rates of capital preservation and lower volatility.

Significant Increase in Demand for Infrastructure Assets

Further, Northleaf predicts a continued investment in necessary infrastructure, including bridges, roads, power generation, telecoms and more, caused by the need to maintain and repair aging infrastructure. The large amount of capital required for investments in critical infrastructure cannot be provided by public funding alone. Private infrastructure is an evolving and appealing investment option that includes new opportunities in the sustainability and technological fields that did not previously exist, and is expected to be one of the fastest-growing segments in private markets.

“As highlighted throughout our report, private markets are expected to provide new and notable investment opportunities for institutional and individual investors,” explained Nadim Vasanji, Managing Director, Northleaf Capital Partners. “Private investments have proven to be resilient across economic cycles, contributing important return and diversification benefits to portfolios. Going forward, we expect to see more investors incorporate and grow private asset exposure in their portfolios as a complement to their public market holdings.”

To learn more about the Outlook, please visit: https://www.mackenzieinvestments.com/en/private-markets-outlook