Preqin Quarterly Update: Private Equity Q4 2022

The last quarter of 2022 saw some optimism return, as public markets managed a gentle rebound from the year’s lows, making it the only up quarter of the year. The S&P 500 was up by 7.1% quarter on quarter, while the MSCI World Index increased by 9.8%.[1] High-yield credit spreads tightened as we saw effective yields come down by around 60bps in the US.[2] That said, the yield curve was still negative and the Federal Reserve (Fed) pressed on with its twice-quarterly rate hikes, albeit at a slightly lower magnitude of 50bps. This gave some market participants hopes of a pivot in Fed policy as inflation shows signs of slowing.

Continued strength in public markets could ease the denominator effect, which affected private equity fundraising activity for most of the year, as well as reduce concerns around the exit environment and asset valuations. These were the most pressing concerns expressed by private equity investors in our November 2022 investor outlook survey.