Corporate Financing Analysis - US Alternative Assets Industry Building Strength - 25 SEPT 2017

Donald Trump was elected US President on a pro-business ticket and this has proven to be a boon for the alternative assets industry since his election victory in November of 2016, and going forward it is likely to remain a driving force behind the growth of the industry. Indeed, US political changes over the past year have boosted optimism for a potentially friendlier regulatory atmosphere for asset managers in all corners of the alternative assets industry, which covered venture capital ( see ' Is There No Stopping Global VC Industry Growth? ' , June 21), mezzanine finance, real estate, natural resource funds, and macro strategies. Back in the immediate aftermath of Trump's election victory in Q416, research house Preqin interviewed 125 US private equity and private capital fund managers and 60 hedge fund managers on their opinions of Trump's proposed policies. The research found that more than half of all those managers believed that key policies such as lowering corporate tax rates (75%), further infrastructure spending (62%), and the incentivised repatriation of corporate earnings by US firms overseas (57%) would benefit the long-term growth of the alternative assets industry. If such predictions prove to be accurate then they would serve as a further shot in the arm to an industry which has already enjoyed strong performances over recent years. Indeed, Preqin data shows that the alternatives industry reached a record high size as of the close of last year. A breakdown of assets shows that hedge funds - despite net investor outflows across the 2016 full-year period - saw assets hit a record USD3.25trn, while private capital funds enjoyed a 7% y-o-y growth in assets to USD4.59trn. In sum, total alternative asset industry assets under management (AuM) tallied USD7.8trn in 2016, up from USD7.4trn in AuM a year earlier, and USD6.9trn in AuM as of the end of 2014.

A Steady Growth Trajectory
Alternative Assets Industry AuM by USDtrn
Source: Preqin, BMI

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