Strong fundraising and returns have seen assets in global private equity funds rise $595 billion in 2019, pushing total industry assets to over US$4.1 trillion (€3.7 trillion).

While total fundraising was slightly lower than 2018 ($628 billion), the average fund size grew, and the average time spent in market decreased to 13 months, the lowest level ever seen, according to a report by data provider Preqin.

The report also found that steady fundraising of over €500 billion for four consecutive years puts the private equity industry on course to reach $5 trillion in assets under management by the end of 2022.

In addition, the report found that the asset class is benefiting from widespread anticipation of a market downturn among both fund managers and investors.

Almost nine out of 10 investors expect to maintain or increase their allocations in 2020, and almost half of fund managers think the position of the market cycle will have a big impact on private equity in the months ahead.

“Private equity’s enormous expansion seems to be accelerating and the industry is on course to add almost a trillion dollars a year for the next five years,” said Christopher Beales, executive editor of Preqin’s 2020 Global Private Equity and Venture Capital report.

“Investor demand has been strong and sustained and fund managers have been able to offer them robust returns even in a low-interest environment, fueling a virtuous cycle of growth,” he said.

But Beales warned that the fundraising marketplace is more crowded than ever before, making it difficult for fund managers to stand out, and for investors to find the right funds for them.

“Deal-making is equally challenging, as high asset pricing is putting pressure on future returns. The industry is fundamentally strong, but 2020’s waters will be tricky to navigate.”

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