Private Equity Lags in Exits and Dealmaking
Private equity exits and dealmaking are trailing wider M&A activity by a significant margin this year, placing increased pressure on the secondary market’s infrastructure, according to Private Equity Wire. This lag highlights a dichotomy between growing transaction volumes and lagging assets under management (AUM) in the market.
Challenges from Democratisation
Democratisation is a key factor affecting private markets, as it will expand AUM and introduce a broader range of investor interests, thereby impacting secondaries. According to Private Equity Wire, this development makes a robust engineering framework mission critical for addressing challenges such as the frequency of valuations, meeting liquidity requirements, lack of operational standardisation, and overall complexity.
The Role of AI in Secondaries
A robust data infrastructure combined with AI has become essential for secondaries, with firms increasingly adopting AI for basic tasks. The number of firms using AI in any form has more than doubled since last year, representing progress that caters to retail investors and embodies public-private convergence, as noted in Private Equity Wire’s analysis.
Infrastructure’s Upward Trajectory
The secondary market’s infrastructure is advancing in sophistication as a response to greater demand, following a ‘build it and they will come’ approach amid the ongoing pressures.
