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Alternative fund managers anticipate capital raising surge
New research from Ocorian, a specialist provider of alternative fund services and leader in entity administration, corporate, and fiduciary services, reveals that alternative fund managers are optimistic about fund launches and capital raising in the next 18 months.
According to the study, a significant majority of alternative fund managers, 81%, expect higher levels of fund raising compared to the previous 18-month period. The research also indicates that 98% of the respondents are confident about successfully launching new funds in the next 18 months, with 91% predicting an increase in alternative asset fund launches in 2023 compared to the previous year.
The survey, conducted by Ocorian Fund Services, interviewed 100 alternative fund managers across real estate, private debt, private equity, and infrastructure. The respondents were from different countries, including the United Kingdom, United States, France, Germany, Netherlands, Sweden, Switzerland, Finland, and Norway. The findings reflect the positive sentiment among alternative fund managers and their expectations for the industry’s growth.
Paul Spendiff, head of business development: fund services at Ocorian, commented on the research findings, stating, “2022 was a tough year for the fund management industry, with the number of funds launched and the amount of capital raised hitting the lowest levels we’ve seen for many years.”
He further added, “While it’s still a challenging economic environment and with a number of geopolitical issues making fund raising more difficult in some markets, it’s encouraging to see how positive alternative fund managers are feeling about the year ahead, predicting both higher levels of fund launches and more capital being raised overall.”
When asked about the levels of fund raising over the next 18 months, alternative fund managers expressed cautious optimism.
Of the respondents, 69% stated that they expected to see a slightly higher level of fundraising, while 12% believed that the increase would be dramatic. Only 18% anticipated that the levels would remain the same, and a mere 1% predicted a decrease.
In terms of confidence in launching new funds, the research revealed that almost all alternative fund managers, 98%, were confident in their ability to successfully launch new funds in the next 18 months. Among them, 52% expressed being very confident, and 46% were quite confident about their prospects.
The study also highlighted the optimism surrounding capital raising in the alternative fund industry. A staggering 96% of the respondents predicted that more capital would be raised in 2023 compared to the previous year.
Among those surveyed, 40% believed that there would be over a 25% increase in capital raised, while an additional 39% expected a raise between 10% and 25%. Approximately 17% of the respondents believed there would be up to a 10% increase.
When asked about the asset classes that would benefit the most from fundraising over the next 18 months, alternative fund managers identified private equity, infrastructure, and real estate as the top three choices.
According to the survey, 73% of the respondents selected private equity, followed by infrastructure at 68% and real estate at 65%. Private debt and hedge funds also made the list, with 59% and 49% of the respondents selecting them, respectively.
Spendiff further emphasised the positive outlook for the industry, stating, “Despite not being out of the woods yet, we expect to see high performing fund managers with the right strategy, good governance, and a transparent approach around ESG will benefit from the improving sentiment in the market.”
As the alternative fund industry moves forward, it is expected that high-performing fund managers with the right approach and a focus on ESG considerations will benefit from the improving market sentiment. While challenges persist, the research offers a glimpse of optimism and resilience within the industry, pointing towards a positive trajectory in fund launches and capital raising in the coming months.
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