Where is the private equity industry placing its bet this year? The top shift from allocations of yesteryear is a move into software, say respondents to Adams Street’s Private Markets Insights survey. Industry participants showed a five percent increase in willingness to invest in the sector year over year.
Telecommunications and travel and hospitality, however, show slackening interest, with 10 percent fewer investors expecting to deploy funds in the former and six percent in the latter. Let’s tally where that sets us up for the year ahead.
So far allocations are stacking up similarly to 2021, where top investment priorities were financial services, tech, and healthcare. The now familiar story of digital transformation is ascendant across industries, but the Adams Street report includes a novel insight into the most attractive places to deploy technology: Sector incumbents that could seek to use regulation (via lobbyists) to curb the impact of disruptors to their business models may be less successful in lobbying in healthcare and finance in particular, “two areas were integrity and probity are less subject to compromise,” the report reads. Let us hope so.
That could mean that investors chasing technological innovators within their sectors could still face competition from tech sector firms. Providers of Internet of Things, enterprise software, and cloud computing services among others could continue to appeal to customers across industries and use regulatory tailwinds to their advantage.
– Brandon Zero