Wall Street’s era of private equity dominance is slowing down after nearly 25 years of outperforming the stock market. Earlier this month, Hamilton Lane reported that the MSCI World Index surpassed private equity returns for the first time since the dot-com bubble burst in 2000. This data reflects buyout funds that began investing in 2022. Prior to this, private equity thrived despite setbacks like the housing crash and recession, benefiting from prolonged low interest rates. In July 2023, Blackstone became the first private equity firm to manage $1 trillion in assets, three years ahead of schedule.
As interest rates have risen, dealmaking has slowed, IPOs have stalled, and uninvested capital (“dry powder”) remains near all-time highs despite slower fundraising. However, firms like Blackstone and Apollo are shifting focus to loans and infrastructure projects. Apollo’s lending business is now nearly 10 times larger than its traditional buyout operations.
For aspiring professionals, opportunities exist in private credit and operational roles. Glenn Mincey of KPMG noted a shift towards professionals who can drive returns through operational improvements. Search funds, mini-private equity ventures, are also gaining traction, attracting younger professionals.
Private credit, fueled by high interest rates and global uncertainty, is booming. Blackstone’s credit business became its largest by assets last year, and Apollo counts over 80% of its assets as private credit. The private credit job market is strong due to a shortage of experienced professionals, leading firms to recruit from investment banks and debt rating agencies.
Hiring in traditional buyout roles has slowed, particularly for midlevel and senior positions, but junior-level hiring remains active. For current employees, compensation upside remains attractive despite lower bonuses. Private equity is cyclical, and while stagnation persists, uncertainty remains about how long it will last.
— news from Business Insider