Vol 21 (2024) - Issue 4

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Will There Be a Soft Landing in the Private Markets?

For investors, it comes as no surprise that the size of the private market relative to the listed market is growing rapidly. The vast majority of companies with more than USD100m in revenue are private globally. At the same time now, stock markets are shrinking in size.
Corporates raised only USD1bn on the London Stock Exchange in 2023, which is the least since 2009.1 Companies choose to stay private for longer now. The typical time to IPO between in 2016-2021 has grown to 10 years, whereas it was 3 years between 1999-2005.
Due to a combination of factors, such as increased costs of listing and increased availability of suitable private capital to drive value creation, companies are preferring private financing. And according to recent State Street global survey of private markets, despite a challenging global macroeconomic environment, institutional investors are increasing their allocation to private markets investments. Can there be a ‘soft landing’, or rather, can the cyclical slowdown come to an end without a recessionary phase in the private markets? This article reviews how whether private markets can sustain its tailwinds, will depend on a number of macroeconomic, regulatory and commercial factors.
Ultimately private market soft landing is more reliant on recovery of the real economy than pure financial economy factors.