North American private capital assets under management reached $7.67 trillion as of June 30, 2023, accounting for about 57% of the $13.43 trillion in global AUM, according to the "Alternatives in North America 2024" report issued by Preqin on March 20.
In the first half of 2023, private markets fundraising totaled $1.24 trillion globally, with 68.5% of that figure ($850 billion) raised by North American-based funds. Large-scale managers such as Blackstone, Brookfield and Thoma Bravo have been especially successful in raising capital from the region’s large institutional investors, the report noted.
In addition, North American private equity assets totaled $3.6 trillion as of the end of June 2023, having climbed by $414.5 billion, or 13%, over the first half of the year. That $3.6 trillion figure included $1.1 trillion of dry powder, a 30.4% portion of the total, a percentage that has risen since the end of 2021, but remains below longer-term averages.
Also, global hedge fund AUM totaled $4.53 trillion as of the end of June 2023, with 81% of that amount ($3.66 trillion) made up of North American-based hedge funds. This percentage has climbed since 2017 driven by hedge fund heavyweights like Bridgewater, AQR Capital Management, Cerberus Capital Management and other large-scale managers.
“Alternative assets are consolidating, and much of that is occurring in North America, more specifically the U.S.,” said Charles McGrath, assistant vice president, research insights, at Preqin, in a news release issued alongside the report. “The region’s large consumer base, economic strength, and relative geopolitical stability have fostered favorable conditions towards this greater concentration.”
Preqin also said in the report that “the mixed economic environment has created friction for alternative assets in North America, but the region is still tightening its grip on the global industry.”
The North American region’s “economic stability and large consumer base has only grown over the past three years, pulling more capital into its investment management ecosystem, where industry giants such as Blackstone, KKR, Carlyle (Group), and Brookfield (Asset Management) continue to attract and deploy sizable amounts of capital across both public and private markets,” Preqin added in the report.
However, Preqin cautioned in the report that investors are becoming more risk-adverse and opting for slightly lower expected returns. “This is something private capital is experiencing in several ways,” Preqin noted. “First, the bonds between the largest GPs and LPs are growing stronger even as those GPs are performing at or below median returns. Second, there has been an about-face on venture capital funds which, particularly in North America, were in favor in the post-pandemic market. The risk presented by these assets became hard to justify as returns faded with higher interest rates and a weakening tech sector.”
Overall, North America remains the dominant global hub for the alternative assets industry, and Preqin expects this consolidation to persist.
