Investing.com — Venture capital (VC) and private equity (PE) investors are cautiously optimistic about near-term dealmaking, although confidence in the longer-term outlook has weakened, according to a new HSBC survey.
HSBC’s latest Funding the Future Survey found that 48% of private investors expect VC and PE activity to increase over the next quarter, up from 44% in July.
However, expectations for growth over the next 12 months declined to 54% from 64%, with the deterioration concentrated in Asia Pacific.
Deal valuations have improved, with 51% of respondents reporting that recent financings were predominantly up rounds, the highest reading in the survey’s history.
Only 3% reported mostly down rounds, suggesting that the valuation adjustments experienced during 2022 and 2023 have largely worked through the market.
Artificial intelligence remains the dominant investment theme, with 85% of respondents identifying AI as the sector most likely to attract private capital in the coming quarter.
Nevertheless, concerns about AI infrastructure spending are increasing.
Some 56% of investors expect a meaningful slowdown in AI infrastructure investment within six to 12 months, compared with 51% previously.
The proportion considering such a slowdown very likely nearly doubled to 20% from 11%.
Data centre real estate and colocation providers are now viewed as the most vulnerable segment, cited by 55% of respondents, up from 24% in July.
Meanwhile, 29% of investors said they would reduce AI exposure by a quarter if their identified downside scenario materialised, compared with 7% previously.
Exit intentions have reached a survey high, with 85% planning to exit at least one portfolio company within 12 months.
Trade sales remain the preferred exit strategy at 73%, while interest in initial public offerings has risen to 35%. Mergers have also gained traction, climbing to 31% from 17%.
Buyout preferences declined to 35% from 46%, reflecting concerns about borrowing costs.
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