Pandemic-related shutdowns continue to hit real estate and real asset deals; private equity and private debt investments recovering, says eVestment
In the third quarter of 2020, pension funds in the United States, Canada and the United Kingdom monitored by eVestment’s Market Lens reported total commitments to private markets investments of just over USD34 billion, according to the latest eVestment Private Markets Monthly Monitor.
Commitments to real estate and real asset investments continue to suffer from apparent concerns about the Covid-19 pandemic’s long-term impact on real estate markets and global economic growth. Private Equity and Private Debt fundraising, on the other hand, is seeing new strength.
Third quarter reported commitments for Real Estate funds of USD5 billion were down 50 per cent from Q3 2019. Real Assets reported commitments in Q3 of USD3 billion, which was a drop of 42 per cent compared to the same quarter last year. Year to date (YTD) Real Estate trails the 2019 mark by 26 per cent while Real Assets lagged by 55 per cent.
On the other hand, pension funds tracked by eVestment announced commitments of USD20 billion and USD6.1 billion to private equity and private debt funds respectively, according to the new data.
For Private Equity, this is a 12 per cent increase over the same period in 2019 and a 21 per cent increase for Private Debt. YTD 2020 Private Equity and Private Debt fundraising are outpacing 2019 figures by 17 per cent and 11 per cent respectively.
“The impact of the pandemic has been felt especially strongly by the real estate and real assets sub asset classes as both are more directly impacted by the physical restrictions and changes in working practice we are experiencing,” says Graeme Faulds, Director of Product at eVestment Private Markets. “We think that investors are aware of this and taking more of a wait and see approach. These asset classes are also typically smaller slices of an institutional investors’ total portfolio so we believe they feel more comfortable under allocating in those areas versus private equity and private debt.”
While the first few months after the arrival of the pandemic slowed private markets commitment activity across the board, institutional investors have adapted to the remote environment and continued working to achieve planned commitment targets for the year.