FUNDRAISING NEWS | September 17, 2024
UBS is forecasting continued growth in private markets, driven by structural shifts in capital allocation and economic forces such as digitalization, decarbonization, and deglobalization, according to a “Private Markets Extended” report published September 16.
In the report, posted to LinkedIn by Head of Alternative Investments at UBS Chief Investment Office, Karim Cherif, the firm said it expects portfolios that include private assets to outperform those limited to public markets over the long term and highlighted several key opportunity areas, with infrastructure, real estate, and private equity standing out.
UBS remains optimistic about private equity, particularly value-oriented buyout strategies and secondaries, where portfolio companies continue to show resilient growth. The firm sees opportunities in complex transactions such as carve-outs and divestitures, especially in the middle market. Thematic private equity strategies, focusing on growth areas like software, healthcare, and climate-related solutions, are also highlighted as attractive for long-term investors.
Venture capital, on the other hand, is experiencing a slower recovery. UBS notes that while the market is cautious, there are opportunities for investors to secure favorable terms, particularly as funding conditions improve.
In private debt, UBS believes the risk-reward profile remains compelling, with direct lenders benefiting from higher yields. The firm advises focusing on senior, upper middle-market loans, particularly those backed by sponsors, where fundamentals remain strong. UBS also highlights the increasing competition from banks re-entering the loan market, which has compressed credit spreads but created more flexible lending terms.
UBS continues to see potential in distressed debt and special situation funds, particularly in areas like commercial real estate, where corporate debt maturities in the coming years could drive deal flow.
UBS maintains a positive outlook on real assets, specifically private real estate and infrastructure. The firm notes that private real estate is nearing an inflection point, following a significant downturn since 2022. While cautious in the short term, UBS sees potential recovery in 2025, with sectors like logistics, multifamily housing, and data centers poised to benefit from strong demand and fundamentals.
On the infrastructure side, UBS remains bullish, especially on assets tied to the energy transition and digital infrastructure. These sectors are supported by government stimulus and inflation-hedged, GDP-resilient cash flows. UBS also highlights the long-term tailwinds from deglobalization, digitalization, and decarbonization, making infrastructure a core focus for the next decade.
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