Institutional clients are increasingly allocating between 20% to 50% of their portfolios to private markets, a significant shift towards private investments, according to Edwin Conway, global head of equity private markets at BlackRock Inc (NYSE:BLK). The trend was confirmed on Thursday. While the interest from wealth clients is still developing, it's displaying a robust growth trend, with allocations ranging from 2% to 5%.
These investments in private markets are not replacing public market exposure but rather complementing it, emphasized Conway. He suggested that future portfolio construction would necessitate the inclusion of private markets as a key component for success.
As part of an organizational restructuring in May this year, BlackRock, the world's largest asset manager, assigned Conway to head a specialized team focusing on venture capital, private equity, infrastructure and growth equity investing. This team also devises investment strategies aimed at navigating the global shift towards clean energy. Before this role, Conway managed BlackRock's broad alternatives unit.
Despite the growing interest in private markets, capital deployment in these markets has reduced by 37% in the first half of this year compared to the peak of 2021. However, Conway noted that with approximately $2.49 trillion in private equity still available as "dry powder," he predicts an upsurge in activity.
Conway also observed that valuations have started to normalize and assets have become more affordable. This normalization could potentially stimulate increased investment activity in both public and private markets.
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