Hello, I’m Michael, and I’m thrilled to welcome you to AGM, your go-to hub for everything happening in private markets. Our weekly newsletter, the AGM Alts Weekly, is packed with the latest news, trends, and insights about the cutting-edge developments and innovations in private markets. Every Sunday, we dive into must-read articles, provide expert commentary, and include a handy index of publicly traded alternative asset managers. You’ll also find job listings from private market firms and stay updated with the latest podcasts and thought pieces from Alt Goes Mainstream.
By joining us, you’ll gain a deep understanding of private markets, helping you and your firm navigate this dynamic and rapidly changing environment.
On a different note, let’s talk about LemonEdge. This company leads the charge in transforming back-office operations for investment firms across various structures like equity, real estate, and infrastructure. With support from heavyweights like Blackstone Innovations Investments, LemonEdge aims to simplify complexities and enable firms to operate at scale effectively. Their software embeds all those intricate Excel-based calculations, delivering top-notch service to both limited and general partners. Curious to see it in action? Take a demo tour of LemonEdge to see how it could benefit your firm.
Greetings this afternoon from bustling New York City, where I find myself at a family office conference. In between meetings, recording podcasts, and a family celebration—my cousin’s birthday, no less—I’m observing the mixed signals 2025 is sending to private markets. There seems to be a blend of cautious optimism tinged with uncertainty, especially when gleaning through the 2025 forecasts shared by various asset managers.
There’s a palpable geopolitical tension overshadowing markets like private equity, which eagerly await exits. As Partners Group refers to it, this is “a brave new world.” With regional disparities and economic volatility at play, investors face a landscape riddled with political divisions and fluctuating trade policies. Moreover, the growing debt and ageing demographics in several developed nations add yet another layer of complexity to the investment climate.
Digging into Partners Group’s insights reveals a stark truth: growth trends we’ve seen historically may not continue. They warn investors that it’s becoming increasingly unrealistic to rely solely on GDP growth or government interventions such as lowering interest rates to boost asset prices.
Apollo’s CEO Marc Rowan highlighted a pivotal shift in risk architecture last year, suggesting that the investment success of tomorrow demands a revamped skill set. He challenges investors by essentially asking, “How can we thrive when the pillars we once depended on are no longer standing?”
The answer may lie in a more rigorous underwriting approach and an unwavering focus on quality. Partners Group further suggests that proficient investment strategies coupled with value creation post-deal are crucial components of driving returns in today’s environment.
Interestingly, private equity isn’t the only appealing facet for savvy underwriters. Apollo suggests the current market conditions—and the noticeable gap between credit spreads in public versus private markets—offer investors the chance to earn premiums by lending within private markets. BlackRock aligns with Apollo and Partners Group, advocating for investments in well-sized, profitable companies.
BlackRock emphasizes the importance of quality, especially considering their data shows that larger companies, those with earnings before interest, taxes, depreciation, and amortization (EBITDA) over $100 million, suffer fewer defaults than their smaller counterparts.
This notion, labeled “deepening dispersion” by BlackRock, goes beyond private credit. They observe similar trends in liquid corporate credit, commercial real estate, and even consumer financial strength in the U.S.
One undeniable aspect can’t be ignored: we are in a multipolar world, both geopolitically and within the investment arena. Just as emerging regional powers vie for influence globally, no single investment strategy or alternative asset manager seems poised to dominate this uncertain world entirely.
The contrasts are glaring. While many countries are veering towards economic isolationism, emphasizing local production and military prowess, overarching investment trends cross national boundaries, suggesting a need for international collaboration.
Partners Group’s 2025 Outlook underscores this idea, arguing investors must focus on deploying capital where long-term secular themes promise growth, rather than clinging to the hope of past high-growth eras or low-interest environments.
Investors appear to be drawn to certain themes and trends, with Apollo’s outlook indicating private equity allocations are on the rise across investor portfolios.
Buyout funds are back on investors’ radars. This renewed interest ties in with the stability seen in private equity exit values, as BlackRock’s Investor Outlook suggests.
Following a turbulent phase post-2022, private equity exit values have steadied, reverting to pre-pandemic levels. Such stability could spell a positive outlook for private equity, according to Franklin Templeton’s 2025 Private Markets Outlook. Historically, private equity has consistently outperformed other asset classes over various time horizons.
Predicting the future is never straightforward, yet the attractiveness of purchase price multiples in private markets compared to public ones shouldn’t be discounted. BlackRock’s outlook indicates middle-market private equity could particularly benefit from such appealing multiples.
Much of the middle-market action revolves around sponsor-to-sponsor transactions or strategic acquisitions rather than broad market sales. Therefore, identifying and investing in the right middle-market buyout funds remains crucial. Franklin Templeton highlights significant performance variations between the top and bottom quartile private equity funds, stressing the importance of partner selection in achieving potential success.
Certain secular themes—spanning AI, data management, decarbonization, and infrastructure—demand immense capital and hence collaboration. Thus, strategic partnerships between funds and regional bodies, like the $25 billion collaboration for infrastructural investments in the Indo-Pacific, are becoming commonplace.
This collaborative spirit even permeates the traditionally competitive finance space, where banks and private credit firms find themselves working together out of necessity. While this partnership may pose long-term competitive threats, it bridges immediate gaps—banks need capital they can’t or don’t wish to hold, and private credits require deal originations.
Apollo’s Investor Day chart from 2024 offers a glimpse into the entwined future of multi-polar investment markets. Today, alternative asset managers boast a significantly larger footprint in the financial landscape than they did a decade ago, a trend likely to continue.
Apollo’s 2025 Outlook and the accompanying analysis of alternative asset manager’s growing market cap—extends to their encroachment on traditional banks’ territories, especially within private credit realms.Â
As alternative asset managers turn towards the wealth channel, they are building brands as compelling as their traditional finance counterparts’. Over time, this might lead to burgeoning consolidation within the asset management sphere, as global players aim to consolidate power, leveraging multi-strategy investment platforms to maximize relative value attractiveness.
Navigating the complex, politically charged market environment will require sharp acumen both by managers and allocators. Relative value attractiveness offers tantalizing opportunities, but understanding macro and geopolitical nuances will be vital.
AGM now tracks top publicly traded alternative asset managers through a specially designed Index. These entities’ inflows offer insights into how investors and allocators view private markets, steering vast capital allocations towards alternative investments. It’s important to note that these figures focus on fee-paying assets under management.
Ares recently unveiled its Q4 2024 Global Credit Monitor, looking ahead to 2025’s credit market outlook.
Exploring where the next financial crisis might arise, John Plender of The Financial Times offers a deep dive into the rise of private markets, cautioning about the sweeping capital flows entering the space. Despite some concerns about transparency and standards in private credit, he warns that its rapid growth might precipitate the next financial upheaval.
In “AGM’s 2/20” section, we offer additional context, arguing that while private markets have undeniably expanded, their overall size remains a fraction of public markets’. Lloyd Apollo suggests we should look not just at growth rates but also acknowledge the absolute growth in public markets has outpaced private ones.
The growing concentration in public markets necessitates a reconsideration of private and public markets’ roles. Apollo’s insights highlight the potential of private markets as a diversification tool amid a diminishing universe of public companies and concentration of value in select few mega-cap stocks.
Pension plans, such as those surveyed in Amundi Investment Institute and Create’s 2024 report, recognize the need for diversification through private markets, given the limited representation of global economic activity in public exchanges. With private markets offering unique benefits, these plans consider them an essential part of their strategic asset allocation.
Further aligning with this outlook, Blackstone’s Jon Gray emphasized the merits of private credit on the In Good Company podcast. He describes private credit as a “farm-to-table” model that removes intermediaries, reduces costs, and trades liquidity for higher returns.
Thinking strategically about asset allocation involves weighing the merits of public versus private investments. According to Gray, delivering superior returns is essential for alternative managers to remain competitive in attracting limited partners.
Apollo, during their 2024 Investor Day, pointed out the potential of private investments to replace certain public equities and fixed-income roles, an argument complementing Gray’s observations.
Where does this lead us? Private markets aren’t a cure-all. Risks and challenges persist, especially amidst a period of uncertainty, as highlighted by Plender. Yet, they still hold value as part of strategic allocation when done wisely. Always balance, moderation, and suitability for the client’s needs remain crucial.
From notable hedge fund performances to evolving investment strategies, the landscape remains dynamic. Citadel and Millennium posted impressive returns, illustrating the capability of multi-manager funds. A report from Goldman Sachs reveals their growing AUM significantly outpacing that of other hedge funds.
The efficiency of multi-manager structures has drawn allocator interest due to their impressive performance. Even as the industry shifts, some funds become inaccessible due to exclusivity.
Closing with some hot topics, those passionate about diving into private markets can explore recent job openings at firms like Blackstone and Apollo, or engage with intriguing podcasts featuring industry experts.
Alt Goes Mainstream continuously fosters a community around these discussions, offering insights across various channels. From strategic job openings to insights from seasoned investors and operators, we stand at the intersection of opportunity and innovation in private markets. Explore events, trends, and conversations shaping the future.
Thanks for being a part of our journey. Feel free to subscribe, connect, or shoot any recommendations our way!
