2025 Market Overview
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rising nav as a % of fund size in younger buyout funds
vintage years 2000-2021
annual private markets distributions
nav by strategy
usd in trillions
Definitions and Disclosures
Liquidity
2024 will see increased distribution activity from 2023, but that’s small comfort for investors. We hear the refrain that distribution levels, on an absolute basis, are very high, but that fails to take into account the increase in NAV. The distribution level is at lows not seen since the GFC, a period of enormous strain in the capital markets. These low distribution levels are happening in a period of strong public equity performance. That is something that has not happened before in the private markets and strikes us as bad news.
When you combine that speed of deployment, together with good (unrealized) performance and lack of exits, you have NAV growth in the buyout world that is well ahead of historical trends. Again, this is good news in terms of healthy portfolios, but bad news in terms of allocation models, available commitment levels and pressure to create liquidity for investors. Let’s get real. For most investors, they gave the managers money in private markets with the expectation that it would come back in some reasonable time period.
We can get a good sense of how slowly the capital is coming back to investors.
The good news is certainly that net asset values are increasing across all portfolios. This reflects healthy portfolio company performance, which is a good thing for all investors. However, it also reflects a lack of normal exit activity, and that is causing problems for many limited partners. It creates allocation pressures that reduce amounts available to invest. For limited partners, this can cause commitment levels to vary year-over-year, and we all know that is not an ideal way to build a portfolio. When we ask managers about this increased NAV, we get a blank look and some muttering that this is all normal and healthy.
Is it totally normal? Let’s consult our data.
The title of this section is “liquidity,” but it’s the lack of the stuff that is causing heartburn in the private markets.
2025 Market Overview
rising nav as a % of fund size in younger buyout funds
vintage years 2000-2021
The good news is certainly that net asset values are increasing across all portfolios. This reflects healthy portfolio company performance, which is a good thing for all investors. However, it also reflects a lack of normal exit activity, and that is causing problems for many limited partners. It creates allocation pressures that reduce amounts available to invest. For limited partners, this can cause commitment levels to vary year-over-year, and we all know that is not an ideal way to build a portfolio. When we ask managers about this increased NAV, we get a blank look and some muttering that this is all normal and healthy.
Is it totally normal? Let’s consult our data.
Definitions and Disclosures
annual private markets distributions
When you combine that speed of deployment, together with good (unrealized) performance and lack of exits, you have NAV growth in the buyout world that is well ahead of historical trends. Again, this is good news in terms of healthy portfolios, but bad news in terms of allocation models, available commitment levels and pressure to create liquidity for investors. Let’s get real. For most investors, they gave the managers money in private markets with the expectation that it would come back in some reasonable time period.
We can get a good sense of how slowly the capital is coming back to investors.
2024 will see increased distribution activity from 2023, but that’s small comfort for investors. We hear the refrain that distribution levels, on an absolute basis, are very high, but that fails to take into account the increase in NAV. The distribution level is at lows not seen since the GFC, a period of enormous strain in the capital markets. These low distribution levels are happening in a period of strong public equity performance. That is something that has not happened before in the private markets and strikes us as bad news.
Interested in learning about the data & tools that power our insights? Connect with our Technology Solutions team
nav by strategy
usd in trillions
The title of this section is “liquidity,” but it’s the lack of the stuff that is causing heartburn in the private markets.
Liquidity
