Assets in Irish private markets expected to double in five years

Assets under management in private markets in the Republic are expected to grow by an average of 14.2 per cent per annum for the next five years, reaching about €50 billion in 2025, according to new analysis by PwC.

The figure stood at €25 billion last year, while the rate of growth compares to an average of about 8 per cent per annum globally and a value of $15 trillion in 2025, up from $9.5 trillion in 2020. The growth projections were revealed at a webcast hosted by PwC.

A poll carried out at the webcast among nearly 100 senior global asset managers suggested the key drivers for using Ireland as a location to invest in alternative funds were the ease of doing business (38 per cent) and the range of products suited for investor needs (35 per cent).

PwC said non-bank lending has recently been exceeding bank lending in advanced economies. The webcast heard that returns are harder to find and investors are increasingly looking to private markets, which will play “a key role” in providing the capital to get economies back to growth.

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Hardest hit

It also heard that private equity investment could help turn businesses around in sectors hardest hit by Covid-19 such as hospitality, travel and leisure.

The webcast heard that private markets will play a central role in getting economies back on their feet and laying a foundation for growth while boosting risk-adjusted financial returns to investors.

Environmental, social and governance priorities are expected to be at the forefront of investor concerns.

The webcast highlighted there will be no trade-off between these issues and returns. “Both are a clear ‘must have’ and need to be delivered,” PwC said.

“But this will take resources, skills and experience. Any asset manager not doing a robust assessment of environmental, social and governance issues will struggle. Value will no longer be achieved or measured in the same traditional way.”

Andrea Kelly, PwC Ireland leader for private markets and alternative investment funds, said there are "clear opportunities ahead" for the industry. "But work needs to be done to realise the potential," she said.

Jigsaw

“There is no doubt that the new fit-for-purpose investment limited partnership regime in Ireland completes Ireland’s product offering. This is an important final piece in the jigsaw to capitalise on Ireland’s broadening appeal as the domicile of choice for alternative assets.

“The industry must now put all efforts into maximising returns through digital investment and seizing the opportunity from environmental, social and governance issues.”