Investors are favoring specialized private equity firms over their diversified counterparts, challenging the traditional business model embraced by publicly listed alternative asset managers, reported Reuters.
In the first nine months of 2023, U.S. private equity funds raised $240 billion, a 13 percent decrease from the previous year, resulting in smaller flagship buyout vehicles. However, smaller and more focused investors such as CD&R and CVC have defied this trend by raising substantial amounts for their private equity funds. The main reason for this shift appears to be a preference for traditional buyouts, which account for a significant portion of CVC and CD&R’s assets, while Apollo and Blackstone have diversified into other asset classes, such as credit and insurance, reducing the significance of private equity.