While we wait for the geopolitical and macroeconomic dust to settle, it is likely that private market transaction activity will slow down. Unfortunately, the anticipated slowdown could not be happening at a more inopportune time, as the ongoing distribution drought and short-term return underperformance have already been weighing on the private markets, dampening activity and sentiment, including fundraising. This pause is going to amplify all of these elements.

Compared to the public markets, private markets deliver far more comprehensive exposure to the economy, from start-up companies to established companies large enough to go public that have opted to stay private, and everything in between, across all sectors. It is possible that the impact of tariffs and other government actions, including second order effects, may be felt further and more deeply in the private markets due to this depth and breadth.

A market slowdown also means the managers waiting to deploy nearly $2 trillion of dry powder have time to absorb the changes and incorporate adjustments ahead of expected deployment. Given the risks outlined above to the capital “in the ground” (i.e., already invested), private investment managers are hyperaware of the need to generate competitive returns on their next set of investments. First and second order effects, as they take hold, could also create additional investment opportunities. Private strategies potentially positioned to benefit during this period include secondaries, deep value industrial, and distressed, among others.

We advocate maintaining private market allocations. Investors should assess their exposures by manager, strategy, company stage, sector, and geography, and prepare to make adjustments to benefit their portfolios. Dry powder may vary by investor, but that capital—at a minimum—will go to work in the market ahead, capturing whatever benefits the current situation may yield. On top of that, we recommend maintaining investment pacing and, therefore, exposure going forward. From a market-wide cash flow perspective, we have observed that capital calls tend to outpace distributions when activity in general contracts to one degree or another. Investors should monitor their private market portfolio liquidity requirements. Maintaining a long-term perspective, which is required for private investing, should serve as a focal point during this tumultuous period.

Andrea Auerbach, Global Head of Private Investments

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First Half 2024 Highlights

• Both private asset classes have struggled to keep up with the public indexes over the past three years as large-cap information technology (IT) companies have dominated the market. Over longer time periods, PE/VC indexes have performed well vis-à-vis public peers.
• By market value, public companies accounted for similar percentages of the VC and PE indexes (about 7% and 6%, respectively), as of June 30, 2024. Non-US companies represented a bit more than 20% of PE and a little less than 15% of VC.

US Private Equity Performance Insights

Vintage Years

As of June 2024, eight vintage years (2015–22) were meaningfully sized—representing at least 5% of the benchmark’s value—and, combined, accounted for 86% of the index’s value. Six-month returns among the key vintages ranged from 1.3% for vintage year 2016 to 7.5% for vintage year 2022 (Figure 2).

Investments in industrials were far and away the largest contributor to the strong performance for the 2022 vintage, while returns across the largest sectors for the 2016 funds were muted—slightly positive for IT and slightly negative for industrials.

LP Cash Flow

During the first two quarters of 2024, fund managers distributed and called roughly equal amounts of capital, $67.4 billion and $66.6 billion, respectively. If this cash flow pattern holds for all of 2024, the year would be markedly different than 2022 and 2023, a two-year stretch when managers called nearly $64 billion more than they distributed.

Four vintage years (2021–24) in the prime of their investment periods represented 83% ($55 billion) of the capital calls, with the three more mature vintages (2021–23) drawing down at least $14.8 billion in first half 2024. Five vintage years (2015–19) distributed 65% ($44 billion) of all capital returned to limited partners (LPs), led by the 2017 vintage’s nearly $12 billion total. There were seven other vintages that distributed at least $1 billion, going back as far as the 2009 cohort.

Sectors

Figure 3 shows the Global Industry Classification Standard (GICS®) sector comparison by market value of the PE index and a public market counterpart, the Russell 2000® Index. The breakdown provides context when comparing the performance of the two indexes. The PE index has a significant overweight to IT and communication services as well as a meaningful underweight in “real assets,” including energy, real estate, and utilities (reflected in the “Other” category), while the public market has long been overweighted to financials.

As of June 2024, at roughly 37% of the index’s value, IT remained the largest among the six meaningfully sized sectors. Combined, the next three sectors by size—industrials, healthcare, and consumer discretionary—accounted for another 39% of the index’s value. Among the key sectors, first half returns were lowest and mostly negative for healthcare, while all others posted low to mid-single-digit results.

US Venture Capital Performance Insights

Vintage Years

As of June 2024, nine vintage years (2014–22) were meaningfully sized and combined, accounting for 81% of the index’s value. Performance for the key vintages during the first half of the year was mixed, ranging from -1.4% (2015 and 2016) to 9.1% (2022) (Figure 4). While the VC index was up slightly for the full six months, it was down in the second quarter, marking the eighth negative quarter since the beginning of 2022.

For the youngest and best-performing large-sized vintage (2022), write-ups were widespread but most impactful in the vintage’s two largest sectors: IT and healthcare. In the two lowest-performing vintages, 2015 and 2016, write-downs were most pronounced in IT, but the 2015 group also suffered losses in communication services. Write-ups in healthcare in both vintages—and financials for 2016 funds—helped to offset some of the write-downs.

LP Cash Flows

In first half 2024, VC managers called $20.4 billion from and returned $11.4 billion to LPs, which represented a slight uptick in cash flow activity over the prior year. US VC managers have called more capital than they have distributed in nine of the ten previous quarters (covering the time period of January 2022 to June 2024), at a ratio of calls to distributions of 1.4x.

Three vintages (2021–23) accounted for nearly 80% (almost $16 billion) of the total capital called during the first six months. While each called more than $4 billion, the 2022 group called the most, $7 billion. Distributions were much less concentrated than contributions, with every vintage from 2011 to 2022 accounting for at least 5% of the distributions during the six-month period. Three vintage years, 2015 and 2017–18 distributed more than $1 billion each, representing about one-third of all capital returned to LPs.

Sectors

Figure 5 shows the GICS® sector breakdown of the VC index by market value and a public market counterpart, the Nasdaq Composite Index. The breakdown provides context when comparing the performance of the two indexes. The chart highlights the VC index’s substantial relative overweight in healthcare and notable higher exposures to financials and industrials. The VC index’s exposure to IT was historically higher than that of the Nasdaq, but starting in 2023, that dynamic shifted in conjunction with tech’s strong performance in the public markets coupled with modest returns in the sector in VC. Exposures to communication services and consumer discretionary companies are also much higher in the Nasdaq than in the VC index.

As a group, the five meaningfully sized sectors made up 91% of the VC index. Communications services earned the lowest return and industrials and more so financials had strong performance.

Caryn Slotsky, Managing Director

Drew Carneal, Associate Investment Director

Wyatt Yasinski, Associate Investment Director

Figure Notes

US Private Equity and Venture Capital Index Returns

Private indexes are pooled horizon internal rates of return, net of fees, expenses, and carried interest. Returns are annualized, with the exception of returns less than one year, which are cumulative. Because the US private equity and venture capital indexes are capitalization weighted, the largest vintage years mainly drive the indexes’ performance.

Public index returns are shown as both time-weighted returns (average annual compound returns) and dollar-weighted returns (mPME). The CA Modified Public Market Equivalent replicates private investment performance under public market conditions. The public index’s shares are purchased and sold according to the private fund cash flow schedule, with distributions calculated in the same proportion as the private fund, and mPME net asset value is a function of mPME cash flows and public index returns.

Vintage Year Returns

Vintage year fund-level returns are net of fees, expenses, and carried interest.

Sector Returns

Industry-specific gross company-level returns are before fees, expenses, and carried interest.

GICS® Sector Comparisons

The Global Industry Classification Standard (GICS®) was developed by and is the exclusive property and a service mark of MSCI Inc. and S&P Global Market Intelligence LLC and is licensed for use by Cambridge Associates LLC.

About the Cambridge Associates LLC Indexes

Cambridge Associates derives its US private equity benchmark from the financial information contained in its proprietary database of private equity funds. As of June 30, 2024, the database included 1,607 US buyout and growth equity funds formed from 1983 to 2024, with a value of $1.4 trillion. Ten years ago, as of June 30, 2014, the index included 937 funds whose value was $478 billion.

Cambridge Associates derives its US venture capital benchmark from the financial information contained in its proprietary database of venture capital funds. As of June 30, 2024, the database comprised 2,537 US venture capital funds formed from 1981 to 2024, with a value of $417 billion. Ten years ago, as of June 30, 2014, the index included 1,500 funds whose value was $138 billion.

The pooled returns represent the net end-to-end rates of return calculated on the aggregate of all cash flows and market values as reported to Cambridge Associates by the funds’ general partners in their quarterly and annual audited financial reports. These returns are net of management fees, expenses, and performance fees that take the form of a carried interest.

About the Public Indexes

The Nasdaq Composite Index is a broad-based index that measures all securities (more than 3,000) listed on the Nasdaq Stock Market. The Nasdaq Composite is calculated under a market capitalization–weighted methodology. The Russell 2000® Index includes the smallest 2,000 companies of the Russell 3000® Index (which is composed of the largest 3,000 companies by market capitalization). The Standard & Poor’s 500 Composite Stock Price Index is a capitalization-weighted index of 500 stocks intended to be a representative sample of leading companies in leading industries within the US economy. Stocks in the index are chosen for market size, liquidity, and industry group representation.

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Hear from Cambridge Associates’ private investment specialists on the valuable role these asset classes can play in a portfolio, as well as what investors should keep in mind as they approach the vast PI landscape.

Explore our collection of videos:

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Private Investment Performance Should Continue to Heal Itself in 2025

Andrea Auerbach, Global Head of Private Investments

As we head into 2025, many of the factors that had an outsized effect on the private investment (PI) market environment in 2021–22 are retreating into the background.

That said, overall private market performance for the next several years will reflect the effects of overinvestment that occurred in 2021 and early 2022, prior to the end of Zero Interest Rate Policy (ZIRP). Investors that committed to 2020 and 2021 vintage year funds saw them deploy half of their capital during this overinflated period. The amount of invested capital was twice the long-term annual average and deployed at a peak in valuations for both private equity and venture capital. Then interest rates climbed, debt costs increased, valuations corrected, and transaction activity slowed considerably over the subsequent years, impacting both limited partner (LP) returns and distributions. The capital overweight to this time period is impacting short-term performance, as shown in the one-year and now three-year rolling benchmark returns.

Moving into 2025, the private markets continue to tick back to their long-term trendlines from a fundraising and capital deployment standpoint, as have valuations. While managers are working hard to deliver returns on the ZIRP-era cohort of invested capital, they are also working hard to successfully invest their remaining capital. Indeed, the capital overhang stands at its highest amount ever by our estimation, and it is being deployed into these more favorable market conditions by managers that have added or acquired dog years of experience during this market cycle. LPs that pulled back on commitments more recently will also benefit from the deployment of their program’s dry powder into the current market.

ZIRP-era investments will take time to fully work their way through programs. While that is happening, investors will continue to steadily build their program exposures by vintage year, strategy, and sector among other factors to continue to make progress toward achieving the long-term returns the private markets are known to deliver.

Private Markets Should Continue to Propagate Public Market Options in 2025

Andrea Auerbach, Global Head of Private Investments

While it was again observably quiet in the institutional private equity (PE) markets in 2024, with muted transaction and fundraising activity plus a decades-long low in distribution yields, there was a substantial uptick in creating pathways for individual investors—retail, accredited, qualified—to access the private markets. Success in these endeavors could drive an overwhelming amount of capital into the space that could overpower current market dynamics and impact returns, particularly in the upper registers of the private markets. Long-standing private markets investors may be best served migrating their capital away from where this constituency is likely to set up shop.

Many managers have been preparing to serve this market, actively acquiring private market strategies to create a full suite of PI offerings on their platforms. In 2024, there was an increase in the launch of interval funds, private fund offerings, and private business development companies. Independent distribution platforms providing fund access to qualified purchasers and accredited investors also expanded their beachheads and increased their offerings. Not to be left out, several registered investment advisors announced acquisitions of/investments in private markets–focused advisors to add the capability to their existing platforms. These trends are expected to continue in 2025.

From a “careful what you wish for” perspective, successfully reaching these investors is not without its challenges. There is an estimated $56 trillion in US household assets alone. If just 5% of that capital is redeployed into private investments, an additional $2.8 trillion is on its way. For reference, Cambridge Associates reported a grand total of $2 trillion in net asset value across its US Private Equity and Venture Capital benchmarks as of December 2023; for the same period, Preqin reported private credit assets at $2 trillion. Increasing supply by that magnitude will impact returns for the managers investing that additional capital and amplify the demands and needs of that constituency.

It is entirely possible the individual investor—as a cohort—becomes the most important investor class, shifting expectations around manager alignment with long-standing institutional investors. Implications of this capital migration include the likelihood of more regulation, a significant increase in demand for secondaries as much of this capital needs to be invested immediately, and heightened headline risk for these platforms as these individual investors make their interests known.

Buyout Transaction Activity in Japan Should Increase in 2025

Sharad Todi, Senior Investment Director, Private Equity

The number of buyout transactions through September 30, 2024 reached 102, more than the total deal count in calendar year 2023, indicating an upward trend. Although the penetration level of private equity in Japan remains lower than in other developed markets, the country is emerging as a natural harbor for leveraged buyouts. We expect buyout transition activity should increase in 2025.

On the supply side, three primary sources of deal flow are contributing to this growth. First, several family-owned small- to medium-sized enterprises struggling to find natural successors are turning to PE firms to ensure business continuity. Second, large conglomerates in Japan are streamlining their operations by divesting non-core assets, creating opportunities for PE investors. Third, the Tokyo Stock Exchange’s demand for listed companies to justify their status by improving book value and capital efficiency ratios is also increasing take-private transactions.

On the demand side, investors are drawn to Japan for several reasons. Unlike most other Asian markets, control is the norm in Japan, allowing investors to shape the company’s journey more effectively. Entry multiples in Japan usually range between 6x and 10x EV/EBITDA, lower than the typical 10+ multiples seen in other buyout markets. Plenty of low-cost debt is available, with most managers able to secure financing at 40% to 60% of enterprise value at an all-in cost below 4.0%. The terms of leverage are typically investor friendly, with banks being more relationship-focused and cooperative with borrowers dealing with struggling assets. Japan’s low economic growth rate drives corporates to pursue inorganic growth, making strategic buyers the preferred exit route for PE firms. Furthermore, Japan’s attractiveness as an investment destination in Asia has increased as China’s appeal has waned, providing large pan-Asian funds a stable market to deploy capital.

We expect these broad macro trends should persist into 2025, which will support increased PE activity levels in Japan.

Venture Capital Fundraising and Investment Activity in China Should Increase in 2025

Scolet Ma, Senior Investment Director, Private Equity

In 2024, China’s USD-denominated venture capital fundraising and investment activity sank to a decade low, driven by sluggish domestic economic growth and ongoing US-China geopolitical tensions. We are likely to see fundraising and investment activities in China VC rebound in 2025 from the 2024 lows, albeit remaining at moderate levels.

More Chinese venture capital firms are expected to return to the market for fundraising in 2025. In 2024, China VC firms came back with smaller funds, more reasonable terms, clearer investment strategies, and enhanced transparency. We expect this trend to continue in 2025. The smaller fund size is appropriate for the current market and will force VCs to be more disciplined in their investment selection.

Geopolitical risks persist for US investors. US LPs are expected to continue withdrawing from China VC due to restrictive foreign investment rules. This presents an opportunity for non-US LPs to engage with high-quality managers. However, these non-US LPs are unlikely to completely fill the void left by their US counterparts, which will leave fundraising levels at a lower level than the peak of 2020–22.

China’s stimulus packages are anticipated to stabilize economic sentiment, but it will take time for China’s structural economic issues to resolve. The CSRC’s new rules have relaxed listed Chinese companies’ merger & acquisition restrictions, creating more exit opportunities for VC portfolios. They may also support more domestic listings. This reality, along with the fact that entry valuations have adjusted downward, make for a more conducive investing environment.

This supportive environment is complemented by talented, experienced founders in many sectors from a highly competitive market. China is emerging as a global innovation center in life sciences, as evidenced by recent global acquisitions of Chinese assets.  For a host of reasons, it has also become a hub of innovation in AI, robotics, and smart manufacturing. For these reasons, VC fundraising and investment activity should increase in 2025.

Continuation Vehicles Should Become an Even More Important Exit Path for Private Equity Sponsors in 2025

Nicolas Schellenberg, Managing Director, Private Equity

In recent years, general partners (GPs) have significantly increased their use of continuation vehicles (CVs) as an exit path for portfolio companies. This trend is partly due to reduced activity in traditional exit markets such as strategic M&A and IPOs, and the need to provide liquidity to LPs. While traditional exit paths may reopen in 2025, we anticipate CV volume will continue to grow, becoming an even more vital exit route for GPs. This growth is driven by greater investor interest and increased understanding and use of CVs by mid-market PE managers.

CVs are now a recognized exit path for PE funds. More GPs have become comfortable with them and see their benefits. Specifically, it allows managers to hold on to their best assets, while at the same time offer cash to LPs that are in need for liquidity through a process that might be less complex to run than a traditional auction process. In the mid-market, smaller assets compared to large-cap buyouts lead to smaller CVs, which are easier to syndicate.

The investor landscape for CVs is rapidly evolving. For LPs of the selling funds, CVs can pose challenges, as time periods to choose between staying invested or taking liquidity are often too tight to adequately assess the merits of a CV for their program. Secondary buyers are increasingly raising funds focused on GP-led transactions, often investing solely in CVs, some exclusively in single asset CVs. Additionally, traditional PE sponsors are developing secondary buyside strategies for CVs, viewing their primary capabilities as synergistic. These institutional fund managers are raising more and more capital from LPs that are attracted by the promise of better risk-adjusted returns and shorter holding periods.

Given the benefits CVs offer to LPs, GPs, investors, and underlying companies, we believe their importance as an exit path for PE sponsors will continue to grow, reaching a new record percentage of total sponsor-backed exit volume in 2025.

Figure Notes

Focus on the Compass, Not the Clock
Pooled private investment periodic returns are net of fees, expenses, and carried interest. Private equity includes buyouts and growth equity. Modified Public Market Equivalent (mPME) replicates private investment performance under public market conditions. The public index’s shares are purchased and sold according to the private fund cash flow schedule, with distributions calculated in the same proportion as the private fund, and mPME NAV is a function of mPME cash flows and public index returns. MSCI All Country World Index (ACWI) returns are net of dividend withholding tax. Past performance is not a reliable indicator of future results. All financial investments involve risk. Depending on the type of investment, losses can be unlimited.

Deal Activity in Japan Has Been on the Rise
Data for 2024 are through September 30. Data retrieved on November 22, 2024, and may revise.

USD-Denominated Venture Capital Activity in China Slowed in 2024
Fundraising data reflect capital raised by USD-denominated, China-based VC funds. Deal activity data reflect all VC investments made in China that are denominated in US dollars, including investments made by global/regional funds, as well as China-based funds. Data for 2024 are as of September 30.

Continuation Vehicle Usage Has Grown Quickly
Sponsor-backed exit volume includes M&A and IPO proceeds, plus estimated continuation fund volume. Percentage represents continuation fund transaction volume (numerator) over sponsor-backed exit deal volume (denominator). Expected annual volume for 2024 is based on first half 2024. Global continuation transaction volume for 2024 is based on first half actual and second half projection.

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Long-term capital flows into climate solutions reflect market-driven structural tailwinds. The drivers of this increasing demand for climate solutions range from the rapidly growing demand for clean energy from artificial intelligence (AI) to the climate adaptation needs driven by increasingly volatile weather patterns. With power consumption from generative AI expected to skyrocket by 70% annually through 2027, ¹ companies are looking to sustainable infrastructure managers for reliable sources of renewable energy and to venture capitalists for promising early-stage technologies that improve energy efficiency. Meanwhile, the changing global climate has created an urgent need to adapt our existing built environment to withstand increasingly volatile and extreme weather.

In addition to market trends, governments have taken decisive actions to foster investment in climate solutions, policies that are not easily undone. The economic impacts of the Inflation Reduction Act (IRA) of 2022, along with the Infrastructure Investment and Jobs Act (IIJA) (2021) and CHIPs and Science Act (2022), have begun to be felt across the United States. More than $18.4 billion of federal investment ² was deployed into clean energy and transportation projects in fiscal year 2023, which stimulated private investment in climate across manufacturing, energy, and industry. The total investment for these areas grew by 67% in 2023, compared to the 12% year-over-year increase in 2022. While these early indications are encouraging, most of the projected $1.2 trillion federal investment has yet to be spent and should further stimulate private investment flows. ³

The economic benefits of these climate policies have touched communities across geographic regions. More than three-quarters of announced clean energy investments have been made in Republican congressional districts, ⁴ and many are projects that some Republican lawmakers have indicated they will defend. ⁵ Full repeal of the IRA under a Trump administration is unlikely, given these attractive economic benefits and any amendment to the law must be passed by Congress. That being said, risk of amendment is higher under full Republican control of Congress. Provisions that likely have lower risk of amendment by a Republican-led Congress include solar and wind tax credits, as well as some technology tax credits (e.g., carbon capture, biofuels, and nuclear-related) with bipartisan support. Other tax credits and rebates (e.g., electric vehicles, energy efficiency) and loan/grant programs are likely at higher risk of amendment. Separately, a second Trump administration could weaken the IRA through interpretation and, subsequently, implementation. The US Supreme Court’s overturn of the 1984 Chevron Deference, which has substantially weakened the power of federal agencies, may further weaken IRA implementation. However, it is worth noting that 2020, the final year of the first Trump administration, marked the first time on record that renewable energy sources surpassed both nuclear and coal in the United States. ⁶

Regardless of the political environment, the landscape for climate-focused investors remains attractive, which should continue to encourage flows into the space. Well-positioned managers combine their technical expertise, operational experience, and investment discipline to invest in disruptive technologies that seek to replace incumbent processes on a purely economic basis. For example, Cruz Foam’s bio-based packaging materials seek to replace conventional single-use plastics in the multi-billion dollar packaging industry while being 30% cheaper. ⁷ Meanwhile, the latest Energy Innovation study finds that 99% of US coal plants are more expensive to operate compared to replacement by renewable energy. ⁸ In addition, demand from limited partners remains strong as investors have become increasingly focused on climate as an investment theme, with 77% of respondents to Cambridge Associate’s 2022 Sustainable and Impact Investing Survey investing in the theme compared to 38% in 2018.

Experienced long-term investors should remain committed to investing in climate solutions regardless of the short-term political shifts. Even with the uncertainty of an election year, US investors and businesses cannot afford to be left behind in the global energy transition. Given the market demand for climate solutions, supportive US government policies, and a robust investment landscape, we expect that private capital flows into climate solutions will remain strong in a second Trump administration.

Di Tang, Senior Investment Director, Sustainable and Impact Investing

Alice Blackorby, Senior Investment Associate, Sustainable and Impact Investing

Footnotes

1. https://www.morganstanley.com/ideas/ai-energy-demand-infrastructure
2. Excluding retail investment; https://rhg.com/research/clean-investment-monitor-q4-2023-update/
3. https://www.markey.senate.gov/imo/media/doc/five_years_in_a_green_new_deal_world_-_020624pdf1.pdf
4. https://www.cnn.com/2024/06/16/climate/clean-energy-investment-republicans/index.html
5. https://www.bloomberg.com/news/articles/2024-08-05/red-state-republicans-say-they-ll-defend-biden-era-green-jobs?sref=IUS5JOJ3
6. https://www.eia.gov/todayinenergy/detail.php?id=48896
7. https://www.atoneventures.com/portfolio
8. https://energyinnovation.org/publication/the-coal-cost-crossover-3-0/

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In 2023, US private equity (PE) performed better than venture capital (VC), but returns for both asset classes trailed those of the public markets, which rebounded strongly from a tough 2022. For calendar year 2023, the Cambridge Associates LLC US Private Equity Index® returned 9.3% and the Cambridge Associates LLC US Venture Capital Index® returned -3.4%. Information technology (IT) continued to be the largest sector in PE and VC and produced divergent results across buyouts and growth equity (the components of the PE benchmark) and venture capital. Tech buyouts, which are generally mature companies, performed the best and growth equity–backed technology companies earned better returns than those in the VC index. Figure 1 depicts performance for the private asset classes compared to the public markets. ⁹

Calendar Year 2023 Highlights

• Despite posting lower short-term results (six months and one year) than the public markets as of December 31, 2023, the US PE index outperformed relevant public indexes in every period longer than three years. The US VC benchmark’s performance relative to public indexes has been more mixed, in part due to its lackluster returns since 2021.
• After spiking during the COVID-19 pandemic era, exposures to public companies in the PE/VC indexes have fallen. At the end of 2023, public companies accounted for a modestly higher percentage of the market value of the VC index’s market value than of the PE one (roughly 8% and 7%, respectively). At the same time, non-US companies represented about 20% of PE and 13% of VC.

Hear Andrea Auerbach, Global Head of Private Investments, discuss where she sees opportunity in private equity. View the full interview.

US Private Equity Performance Insights

In 2023, a macro environment marked by stubbornly high interest rates, geopolitical tensions, and a concentrated but strong rebound in the public market proved to be challenging for PE fundraising, investment activity, and exits. PE portfolio company valuations, which tend to move directionally with the those of public companies, neither fell dramatically in 2022 nor rose massively in 2023 and in both years, were more resilient in buyouts than in growth equity. Limited partner (LP) cash flows were down again in 2023 as market uncertainty and a large bid-ask spread constrained buying and selling, leading to fewer capital calls and distributions. As of the end of 2023, four vintages (2018–21) accounted for nearly 60% of the PE index’s value, which is not surprising, given the abundant fundraising in that era. All four vintages earned at least 9.6% for the year.

According to Dealogic, in 2023, seven US PE-backed companies went public, and they were valued at $19 billion; the number of initial public offerings (IPOs) was up from 2022 (two), but the overall value was down about $3 billion. Among the seven, two were IT-related businesses, two were consumer companies, and there was one each in energy, financials, and healthcare. The number of PE-backed merger & acquisition (M&A) transactions trailed the total completed in 2022 (1,060 versus 1,150), marking the second consecutive drop in M&A exits. Only 17% (or 180 deals) had publicly disclosed valuations and based on the data available, the average transaction size among those deals was $1.2 billion, about $90 million less than the average in 2022. During 2023, there was not much variation in the number of deals by quarter, but the total and average deal values were by far the lowest in the fourth quarter.

Vintage Years

As of December 2023, eight vintage years (2015–22) were meaningfully sized—representing at least 5% of the benchmark’s value—and, combined, accounted for 86% of the index’s value. Calendar-year returns among the key vintages ranged from 1.8% for 2015 to 13.5% for 2022; the 2015 and 2022 vintages represented 6% of the index’s value at year’s end, placing them at the small end of the largest vintages. The two largest vintages, 2019 and 2021, returned 9.6% and 11.7%, respectively (Figure 2).

Part of the divergence of returns across the vintage years was related to the performance of the fund strategies within the PE universe—buyouts and growth equity—which do not share the same return profiles. In 2023, for instance, the benchmark for US buyout funds earned 10.4%, while the US growth equity index posted a 6.1% return. Similarly, for all large vintages except for 2015 and 2016, buyouts meaningfully outperformed growth equity. Additionally, the younger vintages (2018–22) generally earned higher returns than more mature ones (2015–17).

Write-ups in industrials and to a lesser extent IT boosted returns for the top-performing vintage (2022), while in the lowest-returning vintage (2015), write-ups in consumer discretionary and IT were somewhat offset by write-downs in financials and other sectors. Values across the key sectors were written up in the largest vintages, 2019 and 2021, with financials and healthcare earning the highest returns in the 2019 cohort, and financials, healthcare, and IT leading the way for the 2021 funds.

LP Cash Flows

In 2023, limited partner (LP) cash flows were on par with activity last seen in 2020, with $137 billion in capital calls and $125 billion in distributions. Both totals represented declines from 2022, a 27% drop in calls and a 12% drop in distributions. Following ten years (2012–21) of distributions equaling or surpassing contributions, over the past two years, calls outpaced distributions by a ratio of 1.2x. However, during the second half of 2023, fund managers returned more capital to LPs than they called, perhaps a hopeful sign for distributions but also an indication of a less active investment environment.

Five vintage years (2019–23) represented 89% ($123 billion) of the capital calls, with each drawing down at least $10 billion during the year; the 2021 and 2022 vintages were the most active, combining to call almost $85 billion. Seven vintages (2013–19) accounted for most of the distributions, and within that group, the 2016–17 and 2019 vintages led the way as each returned about $17 billion to LPs.

Sectors

Figure 3 shows the Global Industry Classification Standard (GICS®) sector breakdown by market value of the PE index and a public market counterpart, the Russell 2000® Index. The comparison provides context when comparing the performance of the two indexes. The PE index continued to have a significant overweight to IT and meaningful underweights to financials, energy, and real estate (the latter two are reflected in the “other” category).

As of December 2023, there were six key sectors by size and IT was by far the largest (36% of the index’s market value). Three of the six large sectors earned double-digit returns for the year (IT, financials, and industrials) and among all six, calendar year returns were best for IT and lowest for communication services.

US Venture Capital Performance Insights

For the second consecutive year, the CA US venture capital index produced a negative return in 2023 (-3.4%), as the industry continued its reset with respect to valuations, fundraising, investing, and exits. Performance for IT companies was a significant drag on the benchmark’s return, a stark difference from the public market indexes, whose rebounds in 2023 were buoyed by a small number of tech-related companies.

According to the National Venture Capital Association and Pitchbook, by number, US VC managers completed about 18% fewer deals in 2023 than they did in 2022 (14,491 from 17,709), a smaller decline than when measured by value ($166 billion from $242 billion in 2022). Exits have declined more dramatically, especially by number. Compared to 2022, total reported exits (1,073) fell 24% in 2023, driven by a slower environment for M&A and buyouts, rather than in IPOs, which were marginally higher in 2023 than in 2022. Values for M&A exits declined commensurately with the drop by number and despite the small increase by number, the value of IPO exits was also lower in 2023 than in 2022. Notably, for the second consecutive year, the value of exits via M&A was higher than those of public listings in 2023, while the number of M&A exits (755) was the lowest of any of the last ten years.

Vintage Years

As of December 2023, nine vintage years (2014–22) were meaningfully sized and combined, accounted for 81% of the index’s value. With one exception (13.9% for vintage year 2022), returns across the key vintages were largely negative, ranging from -9.6% (2014) to -0.8% (2021) (Figure 4). With a 0.5% return in the fourth quarter, the VC index ended its seven-quarter streak of negative returns, its longest since the tech wreck that started at the end of 2000.

For the lone key vintage (2022) that earned a positive return during the year, all sectors except for IT performed well. In the lowest-performing vintage, 2014, all key sectors suffered write-downs. For the 2021 cohort, financials was the biggest drag on returns.

LP Cash Flows

Amid the challenging investment and exit environment, US VC LP cash flows declined in 2023, with capital calls ($30.3 billion) mirroring those of 2020 and distributions ($19.4 billion) hitting the lowest total since 2016. After ten straight calendar years (2012–21) of distributions outpacing calls, the reverse was true the past two years, with calls outnumbering distributions by a ratio of 1.3x.

Four vintages (2020–23) accounted for 89% (roughly $27 billion) of the total capital called during the year. While each vintage called more than $3.4 billion, the 2021 and 2022 groups were the most active, combining for almost $19 billion in total. Distributions were more widespread than contributions, with seven vintages (2012–18) returning at least $1.2 billion to LPs for a combined $13 billion. The 2012 vintage distributed more than $3 billion, the most of any group.

Sectors

Figure 5 shows the GICS® sector breakdown of the VC index by market value and a public market counterpart, the Nasdaq Composite Index. The breakdown provides context when comparing the performance of the two indexes. The chart highlights the VC index’s meaningfully higher exposures to healthcare, financials, and industrials. The indexes are both heavily tilted toward IT, and Nasdaq weightings in communication services and consumer discretionary have remained much higher than those of the VC index.

Collectively, the five meaningfully sized sectors made up 91% of the VC index. Communication services posted the lowest return and industrials the best.

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Caryn Slotsky, Managing Director
Wyatt Yasinski, Associate Investment Director
Drew Carneal, Associate Investment Director

Footnotes

1. https://www.morganstanley.com/ideas/ai-energy-demand-infrastructure
2. Excluding retail investment; https://rhg.com/research/clean-investment-monitor-q4-2023-update/
3. https://www.markey.senate.gov/imo/media/doc/five_years_in_a_green_new_deal_world_-_020624pdf1.pdf
4. https://www.cnn.com/2024/06/16/climate/clean-energy-investment-republicans/index.html
5. https://www.bloomberg.com/news/articles/2024-08-05/red-state-republicans-say-they-ll-defend-biden-era-green-jobs?sref=IUS5JOJ3
6. https://www.eia.gov/todayinenergy/detail.php?id=48896
7. https://www.atoneventures.com/portfolio
8. https://energyinnovation.org/publication/the-coal-cost-crossover-3-0/
9. Cambridge Associates’ mPME calculation is a private-to-public comparison that seeks to replicate private investment performance under public market conditions.

The post US PE/VC Benchmark Commentary: Calendar Year 2023 appeared first on Cambridge Associates.

We believe success in co-investing is driven by access to robust and high-quality deal flow, and the current market climate creates additional incentives for GPs to expand their co-investment offerings. Private fundraising ¹⁰ activity slowed in 2022 and 2023, with respective declines of ~21% and ~35% from its peak in 2021. Though 2024 fundraising data show early signs of recovery, private markets have also underperformed public markets in the short term. The continuing distribution drought has led to skepticism among some LPs about the benefits of private investments, which in our experience has created a dynamic whereby GPs have to work very hard to secure fund commitments.

Co-investments play an increasingly important role in today’s fragile environment for two reasons. First, providing co-investment opportunities allows GPs to build goodwill and showcase their expertise to current and prospective LPs. Second, GPs can use co-investments to make their current fund capital go further. Due to the added incentives for GPs, LPs should benefit from improved access to high-quality opportunities, resulting in a more robust funnel. However, the co-investment evaluation process is critical; LPs must remain wary of adverse selection.

Co-investments offer LPs an important tool to control pacing and express market views. While this is true in any investment environment, it is particularly valuable when private market activity slows. In 2023, global private equity capital deployment was down ~46% from its peak in 2021, and in 2024 it is tracking to a ~43% decline from the historic high. ¹¹ Despite this slowdown, GPs are increasingly incentivized to offer co-investments as discussed above. LPs can leverage this co-investment deal flow sourced across GP relationships to manage investment pacing. Further, compared to blind-pool funds, co-investments allow LPs to control specific exposures—and associated risks—in a portfolio. This enables LPs to focus on opportunities that are attractive in the current environment, which can help be identified through the due diligence process. Acknowledging that market volatility has led to allocation constraints for some investors, co-investing can still be a useful tool. Those with direct co-investment programs can adjust annual budgets to respond to market swings, while LPs using co-investment funds can continue to benefit from them by scaling back other commitments.

Co-investments are underwritten based on the current market environment, and today’s landscape should foster more conservative assumptions. Private equity firms synthesize macro and microeconomic data from public and private markets to inform their assumptions that drive financial forecasts and return projections. Typically, GPs provide detailed information about their underwriting to co-investors that can then validate these assumptions as part of their own due diligence process. These factors include, but are not limited to, company valuations, market growth rates, industry dynamics, and the availability and cost of debt. Recently, valuations have fallen from 2021 highs, growth forecasts are more conservative, and higher debt costs have focused sponsors on appropriate capital structures. The confluence of these factors should provide LPs with confidence that the current opportunity set is based on prudent underwriting assumptions. We believe deals struck in this vintage could produce attractive returns in the long run.

While co-investments offer high potential to add value, they are complex to source and execute. Co-investors should have a sound strategy and understanding of where they can be most competitive in finding the greatest value. We believe success is driven by a robust pipeline of opportunities and by having the appropriate resources to be able to transact quickly and efficiently. Today’s market has shifted the incentives of GPs to provide quality co-investment opportunities to LPs, for whom the ability to control capital deployment is increasingly valuable. In response to higher interest rates and a challenging fundraising market, underwriting standards have risen. Co-investors can evaluate these underwriting assumptions and build conviction in today’s opportunity set. Co-investing is a critical component of the private investment ecosystem and one that is particularly attractive today for those that are well positioned and prepared.

Rob Long, Senior Investment Director, Private Equity

Footnotes

1. https://www.morganstanley.com/ideas/ai-energy-demand-infrastructure
2. Excluding retail investment; https://rhg.com/research/clean-investment-monitor-q4-2023-update/
3. https://www.markey.senate.gov/imo/media/doc/five_years_in_a_green_new_deal_world_-_020624pdf1.pdf
4. https://www.cnn.com/2024/06/16/climate/clean-energy-investment-republicans/index.html
5. https://www.bloomberg.com/news/articles/2024-08-05/red-state-republicans-say-they-ll-defend-biden-era-green-jobs?sref=IUS5JOJ3
6. https://www.eia.gov/todayinenergy/detail.php?id=48896
7. https://www.atoneventures.com/portfolio
8. https://energyinnovation.org/publication/the-coal-cost-crossover-3-0/
9. Cambridge Associates’ mPME calculation is a private-to-public comparison that seeks to replicate private investment performance under public market conditions.
10. Private fundraising refers to buyout and growth equity funds.
11. The 2024 fundraising activity is annualized based on data as of March 31, 2024.

The post Are Co-investments Attractive in Today’s Environment? appeared first on Cambridge Associates.

Why Private Credit?

The private credit asset class benefits from several characteristics that we believe are attractive to investors’ portfolios. The asset class has a contractual maturity date, often benefits from collateral, and is senior to the equity in the capital structure. These attributes provide compelling downside protection and a shorter duration relative to private equity (PE) and venture capital (VC).

Private credit has historically outperformed public leveraged finance asset classes such as BSL and high-yield bonds. As a private investment, the asset class exhibits less volatility than the publicly traded markets. While public and private credit marks will be driven by credit quality, public markets also include an element of supply/demand (market technical) that can cause mark-to-market price volatility. Depending on credit quality, private credit spreads tend to be 200 basis points (bps) to 600 bps higher than public markets (Figure 2).

Direct lending loans are floating rate, which have limited interest rate risk and help to protect a portfolio from rising rates. Loans will typically be structured with an interest rate floor, which will ensure a minimum level of income. Most strategies will distribute interest income quarterly, and, with an average life of three to four years, principal is returned at a significantly faster rate than private equity strategies. Additionally, with a contractual maturity date, private credit funds have shorter lives than other private investment strategies.

Relative to public markets, private credit strategies offer investors stronger alignment of interest. In the public markets, whether high-yield or BSL, underwriting banks have an originate-and-distribute model. In this model, the underwriting bank will view the borrower as their client, not the investor or holder of the loan. The motivation for the bank as intermediary is to obtain the best deal for the borrower that will clear the market. In private credit markets, the general partner (GP) is often the originator of the loan and the manager of the risk. The GP views the limited partner (LP) as its client, and its objective is to get the best deal possible for the fund.

Private credit strategies, particularly direct lending, benefit from downside protection through a number of contractual provisions. Financial maintenance covenants provide an early warning to deteriorating borrower performance, allowing for lender intervention and the ability to work with the company to influence an improvement plan. Lending on a first-lien senior-secured basis means that the direct lending loan is secured by assets of the company. In the event of a restructuring, private credit’s position in the capital structure means that it will receive a recovery before the equity. If the equity is worth anything greater than zero, then the direct lending loan will receive all its money back plus a return.

Private credit includes a diverse array of strategies allowing investors to build a portfolio of complimentary strategies. The section below reviews the sub-asset classes in more detail, but we believe that the diverse strategies available in private credit allow an investor to construct a portfolio that will be less correlated to equity markets and can produce stable, attractive returns.

Sub-asset Class Review

Figure 3 depicts how private credit strategies offer a range of return targets and fund lives.

Senior Debt

Senior debt, or direct lending, refers to funds that lend money to performing companies on a first lien senior secured basis. The loans will be used for a variety of purposes, including financing leveraged buyouts and acquisitions, funding growth, or repaying existing debt. The company may be owned by a private equity firm (sponsor-backed) or a public or privately owned company (non-sponsor-backed). Managers will tend to focus on company size, with lower middle market defined as companies with $10 million to $50 million of EBITDA; core middle market as companies with $35 million to $100 million of EBITDA; and upper middle market as companies with greater than $100 million in EBITDA. Sponsor-backed core middle market is considered the most competitive area of the market. Upper middle market competes with the BSL market, and, as such, tends to feature weaker terms and less favorable pricing.

The loans will generally be floating rate, based on the secured overnight financing rate (SOFR) plus a credit spread, minimizing interest rate risk, and issued below par to create original issue discount (OID). The loans will be secured by the assets of the company. The fact that the loans are generally secured by all the assets of the company is important as it impacts the recovery value. Historically, first-lien debt has an ultimate recovery value of 70%, while unsecured bonds have a recovery rate of 47%, according to Moody’s.

Senior debt funds may use fund level leverage to increase the capital available for investment in order to increase the returns. Leverage will generally be non-recourse to the LPs and will not be mark to market. The leverage provider could be a bank, another fund, or a structured finance vehicle such as a collateralized loan obligation. The debt used for this purpose will be secured by the loans owned by the portfolio and not by the obligation of the LP to fund a capital call. This is different from a subscription line, which is secured by the fund’s right to call capital from the LPs. Subscription lines do not increase the amount of capital available to invest but instead change the timing of the cash flows, which could increase the internal rate of return. Generally, private credit funds use subscription lines only to facilitate capital calls and will pay the lines down to zero periodically.

Subordinated Capital

Subordinated debt is a loan or security that ranks lower than other loans with regard to claims on assets or earnings. Subordinated debt is a riskier form of debt as it is not repaid until after unsubordinated (senior) debt holders have been repaid in full. Often called mezzanine debt because it ranks between the senior debt and the equity of a company, the debt will frequently include some form of equity, either a co-investment in the common equity alongside the private equity owner or warrants.

The subordinated capital category also includes capital appreciation strategies. These funds will invest, typically in performing companies, anywhere in the capital structure from senior debt to preferred equity. The debt investment will often include some form of equity upside, such as warrants, preferred securities, or in the common equity. As the demand for mezzanine debt has waned in recent years, many mezzanine debt managers have migrated to this strategy. In both traditional mezzanine and capital appreciation strategies, the returns are driven by both the debt security and the equity ownership. Typically, a subordinated capital fund will include between 10% to 20% equity exposure.

Credit Opportunities and Distressed

Credit opportunities refers to a broad range of strategies that are typically opportunistic in nature, meaning they are either investing in companies in stressed or distressed situations, or addressing an unmet capital need in a creative way. Credit opportunities funds may have a broad spectrum of credit and debt-related investments across geographies. Investments can be made in performing, stressed, or distressed companies, and can be directly originated and structured in the primary market or reflect purchases of securities in the secondary market. While the return of a credit opportunities fund will be focused on income, there will often be an element of equity return or capital gain, particularly in more distressed situations.

Credit opportunities managers may pivot to a greater focus on distressed when market default rates rise to elevated levels. Some managers are exclusively focused on distressed situations. Distressed investors target companies or assets where the company is at a high risk of entering bankruptcy or restructuring. While it is not the intent of the fund to own the company, the manager is prepared to take equity through a restructuring and own that equity for a period of time. This strategy differs from distressed for control strategies, where the explicit purpose of purchasing the debt security is to take ownership of the company through a restructuring of the debt. We view distressed for control as more of a private equity–type strategy, as the manager seeks to own and manage companies as its primary activity.

Specialty Finance

Specialty finance managers pursue a very broad array of niche strategies, requiring highly specialized expertise. A key feature of specialty finance strategies is that they provide diversification away from single name corporate risk—either by lending or investing in pools of assets—or investing in assets that are not correlated to equity markets. A common strategy is to lend against a pool of financial assets, such as consumer or small business loans. The fund is essentially funding the non-bank originator of the loans who may remain as the servicer of the loans. The loans are placed into a special purpose vehicle, which insulates the investment from distress at the originator as the loans can be moved to another servicer. The loan will be structured by looking at historical default and loss rates and requiring the originator to retain the first loss piece, or cushion, to the pool. This is similar to the process used to create asset-backed securities. Another common strategy is for the fund to own a portfolio of equipment, such as rail cars or aircraft, and lease the equipment to create a cash flow stream.

Other strategies include investing in royalties. In life sciences, managers may invest directly in the royalty, helping the company or other entity that owns the royalty to monetize its asset by allowing the fund to collect the royalty payment for a period of time. Similarly, in music royalties, the artist can monetize its catalogue by selling the royalty payments. Increasingly, life sciences managers have moved to a lending strategy where the patent is taken as collateral. This will shorten the duration of the investment. Additional strategies include life settlements, insurance, trade finance, litigation finance, and non-performing loans.

Specialty finance can have a wide range of return targets and duration depending on the strategy. Consumer lending tends to be very short, while royalties—particularly music royalties—can be very long dated. Returns can range from the high single digits to the high teens.

Implementation

With the variety of private credit strategies available, we believe it is possible to create a well-diversified portfolio that can generate income and provide some upside. We like to construct portfolios with a mix of senior debt, credit opportunities, and specialty finance strategies (Figure 4). Senior debt strategies generate cash flow and provide a ballast to the portfolio, offering downside protection and income. A credit opportunities strategy should generate returns higher than direct lending during benign markets, and, importantly, will benefit from market stress and dislocations. The funds can offset any stress that may be seen in the senior debt strategies during periods of elevated defaults. An allocation to specialty finance will provide diversification away from single name corporate risk.

When constructing a portfolio, an investor’s primary objective will influence allocation to the different sub-strategies. For example, an income-oriented investor may focus on direct lending strategies, picking a diversified group of managers to gain exposure to sponsor and non-sponsor and across the borrower size categories. This portfolio may also consider an allocation to income focused specialty finance strategies to provide some diversification. The portfolio should provide a stable income stream, 100 bps to 200 bps higher than the public leveraged finance markets, with lower volatility and risk profile.

Investors more focused on returns will gravitate to higher returning strategies in credit opportunities and distressed. Strategies may focus across different asset classes, such as corporate, real estate, and structured products. A portfolio constructed this way could be attractive to a tax-paying investor, as it can focus on strategies that offer a greater degree of capital gain relative to income.

Investors seeking a diversified allocation to private credit may invest across the different sub-asset classes, such as senior debt, credit opportunities, and specialty finance. We believe that a portfolio constructed this way can deliver an attractive income stream, coupled with some higher returning credit opportunities strategies that can also benefit from a dislocation. The addition of specialty finance will serve to diversify away from corporate risk. Investors can weight the components depending on their preference for income relative to higher returning strategies.

Investors allocate to private credit from various parts of their portfolios. Some investors will have a specific allocation to private credit as part of their total portfolio. Investors that allocate from their illiquid buckets will often focus on higher returning strategies as they are comparing the funds to their private equity and venture allocations. In a zero-rate environment, many investors looked to direct lending to improve returns in their fixed income allocations. Finally, many investors have looked to their diversifiers bucket to carve out a piece to allocate to private credit, recognizing that the lock-up nature of the funds is illiquid relative to the rest of that allocation, but that the private credit portfolio can generate some income and an attractive return.

Conclusion

The private credit market has developed and evolved significantly since the GFC. The asset class includes a broad array of strategies to satisfy investors’ return objectives. Strategies can be cash flow generating and offer shorter duration than other private investment strategies. Downside protection creates an attractive risk mitigant relative to private equity and venture strategies. Investors can construct portfolios to provide income, benefit from market dislocations, and provide some diversification away from single name corporate risk.

Frank Fama, Co-Head of Global Credit Investment Group

Walker Haymond, Brittney McManus, and Ilona Vdovina also contributed to this publication.

Index Disclosures

Bloomberg Aggregate Bond Index
The Bloomberg Aggregate Bond Index is a broad-based fixed income index used by bond traders and the managers of mutual funds and exchange-traded funds (ETFs) as a benchmark to measure their relative performance.

Bloomberg US Corporate High Yield Index
The Bloomberg US Corporate High Yield Bond Index measures the USD-denominated, high-yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on the indexes’ EM country definition, are excluded. The US Corporate High Yield Index is a component of the US Universal and Global High Yield Indexes. The index was created in 1998, with history backfilled to July 1, 1983.

Bloomberg US Treasury Index
The Bloomberg US Treasury Index measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury. Treasury bills are excluded by the maturity constraint but are part of a separate Short Treasury Index. STRIPS are excluded from the index because their inclusion would result in double-counting. The US Treasury Index is a component of the US Aggregate, US Universal, Global Aggregate, and Global Treasury Indexes. The index includes securities with remaining maturity of at least one year. The US Treasury Index was created in March 1994, and has history back to January 1, 1973.

Morningstar LSTA US Leveraged Loan 100 Index
The Morningstar LSTA US Leveraged Loan 100 Index is designed to measure the performance of the 100 largest facilities in the US leveraged loan market. Index constituents are market-value weighted, subject to a single loan facility weight cap of 2%.

Footnotes

1. https://www.morganstanley.com/ideas/ai-energy-demand-infrastructure
2. Excluding retail investment; https://rhg.com/research/clean-investment-monitor-q4-2023-update/
3. https://www.markey.senate.gov/imo/media/doc/five_years_in_a_green_new_deal_world_-_020624pdf1.pdf
4. https://www.cnn.com/2024/06/16/climate/clean-energy-investment-republicans/index.html
5. https://www.bloomberg.com/news/articles/2024-08-05/red-state-republicans-say-they-ll-defend-biden-era-green-jobs?sref=IUS5JOJ3
6. https://www.eia.gov/todayinenergy/detail.php?id=48896
7. https://www.atoneventures.com/portfolio
8. https://energyinnovation.org/publication/the-coal-cost-crossover-3-0/
9. Cambridge Associates’ mPME calculation is a private-to-public comparison that seeks to replicate private investment performance under public market conditions.
10. Private fundraising refers to buyout and growth equity funds.
11. The 2024 fundraising activity is annualized based on data as of March 31, 2024.

The post Private Credit Strategies: An Introduction appeared first on Cambridge Associates.