Private equity solutions for 2023

Private equity firms face an ever-changing landscape in 2023. The remnants of economic uncertainty have led to a renewed focus on operational efficiency and cost cutting. At the same time, investors still need new ways of generating high returns in a low-yield environment. 

Popularity of private equity solutions likely to increase

• Following the economic impact of the pandemic, companies are looking to recover and grow, and private equity provides the necessary capital and support

• Mergers and acquisitions are expected to pick up in 2023 as companies look to expand their market presence, acquire new technologies and add new products and services

• Amid the lack of public-market funding due to the persistent uncertainty, many companies are turning to private equity solutions since private equity firms are often willing to provide funding to those companies not eligible for public-market funding

• Investors are focusing increasingly on ESG considerations, and private equity firms are often better equipped to help companies address these concerns

The focus of private equity solutions

Technology 

One of the most important trends in private equity is the growing focus on technology. This is driven by the rapid pace of technological change, making it difficult for traditional companies to compete. Private equity firms are well positioned to take advantage of this trend, as they have the resources and expertise to invest in cutting-edge technologies and help their portfolio companies stay ahead of the curve.

In particular, private equity firms are likely to be interested in investing in companies at the forefront of digital transformation. This includes companies developing new technologies such as artificial intelligence, machine learning and the internet of things. 

These technologies have the potential to revolutionise entire industries and private equity firms that can identify and invest in the most promising companies in this space.

Sustainability 

Another key trend in private equity is the growing focus on sustainability. As more and more investors become concerned about the environmental impact of their investments, private equity firms are under increasing pressure to demonstrate their commitment to sustainability. This includes investing in companies focused on reducing their carbon footprint, developing renewable energy sources and promoting sustainable business practices.

To meet these demands, private equity firms are likely to look at investments in sustainable infrastructure such as renewable energy, electric transport and clean technology. Right investments in these areas would not only drive returns, but also align with growing consumer demand for socially responsible investments.

Healthcare

The healthcare sector was one of the few sectors relatively insulated from the economic downturn caused by the pandemic. This was due in part to the ageing population driving demand for healthcare services.

Private equity firms are well positioned to take advantage of this trend, as they have the resources and expertise to invest in healthcare companies (healthcare providers, medical technology companies and biotechnology firms) and help them capitalise on growing demand for their services.

One area of healthcare likely to be of particular interest to private equity firms is telemedicine. The pandemic accelerated the adoption of telemedicine, with patients and healthcare providers forced to find new ways to connect remotely. Private equity firms that can identify and invest in the most promising telemedicine companies would be well positioned to capitalise on this trend.

Financial services

Private equity firms are also likely to be interested in investing in companies focused on meeting the needs of the growing number of retirees. These include companies that provide financial services and products for retirees, and companies that develop products and services specifically designed to meet the needs of older adults.

As the population continues to age, demand for products and services tailored to meet the need of retirees is likely to grow, and private equity firms that can identify and invest in the most promising companies in this space would be well positioned for success.

Conclusion

Private equity solutions for 2023 are likely to be focused on technology, sustainability, healthcare and retirement. As investors continue to look for new ways to generate returns in a low-yield environment, private equity firms would need to be agile and adapt to the changing landscape.