Global Fund Banking Outlook Q2 2022
Key takeaways
01
Fundraising timelines stretch
More investment firms are going after the same pool of capital from limited partners (LPs). With more than 2,500 private equity funds in market globally as of January 2022, the battle for LPs’ time and capital could become more competitive.
02
Foreign currency hedging is on the rise
Increasing access to international companies and heightened market volatility has investors paying closer attention to foreign exchange rates—leading to a jump in hedging activity to protect their investments and returns.
03
Exits are expected to temper after a record year
Despite a softening IPO market, M&A remains steady and there is plenty of dry powder ready to be put to work. While the slowing exit environment may damper distributions, after a record 2021, last year’s distributions are likely to flow back into the PE and VC ecosystem.
Large funds are taking the lion’s share of capital
The smallest and largest funds in the US market are among the most active, with the smallest raising a greater share of funds and the largest raising the bulk of the capital.
FX hedging activity is rising
As it becomes easier to pursue cross-border deals and heightened market volatility, investors are undertaking a record amount of hedging activity.
Will an IPO slowdown lead to a decline in distributions?
Following the 2008 financial crisis, distributions slowed markedly. Whether the same will happen in 2022 depends on whether other types of exits fill in the hole left by IPOs.
Explore other Global Fund Banking insights
