Alternative Investing Report - March 6, 2025

*as of 3/5; Sources: S&P, BTC, FTSE, DJRE, GOLD

Private equity giant Bain & Company released its 2025 Global Private Equity Report, which showed a rebound for the asset class in 2024 and some mixed signals for the year ahead. Both buyout deal value and exit count rose significantly year-over-year, both more than 30%. But fundraising fell for the third year in a row, declining 24% year-over-year and down 40% since 2021. Overall assets under management in the industry as a whole fell by 2%, the first time that has happened since Bain started tracking these numbers in 2005.

➨ TAKEAWAY: After two years of stagnant deal activity, 2024 was a welcome change for private equity, but the start to 2025 has not been promising, with January being the worst month in a decade for U.S. M&A activity. This is particularly concerning in the wake of reduced fundraising. Continuing uncertainty and a greater economic slowdown could blunt the progress shown last year, and liquidity is likely to still remain at a premium.

In this episode of Smart Humans, Vincent CEO Eric Cantor and Sacra co-founder Jan-Erik Asplund looked at Anthropic, the American AI startup behind LLM model Claude. They cover the company’s rapid growth, the competitive landscape in AI, and how the recent emergence of DeepSeek could impact Anthropic's trajectory.

Christie’s controversial AI art auction “Augmented Intelligence” generated a lot of attention for what was ultimately a minor event, with its $728,784 in sales consistent with pre-sale expectations. The highest-grossing artwork was Refik Anadol’s “Machine Hallucinations – ISS Dreams – A,” which sold for $277,200, above its $200,000 high estimate. All together, 28 of the 34 lots sold, though only 8 of the lots sold for more than $20,000.

➨ TAKEAWAY: Whatever you may think of the merits of AI art, and whether it actually counts as art, the reality is that a major auction house like Christie’s holding this sale is the first step in legitimizing artificial intelligence in the art market. It’s very early, and while investing in this category carries risk, the earliest examples of a particular genre often take on a historical importance down the road for collectors.

🏢 Strong REIT performance: The FTSE Nareit All Equity REITs Index rose by 4.2% in February, a particularly noteworthy performance given that the rest of the equities market was down - the Dow fell by 3.2% and the S&P 500 dropped by 1.3%. Residential, industrial and retail REITs saw strong results, but office lagged, falling by 3.9%.

🏡 Best time to list: In 2024, homes listed in the last two weeks of May sold at a 1.6% premium compared to the rest of the year, though sellers generally get better than average returns between mid-March and the end of July.

🪙 Bitcoin’s role in the reserve: Commerce Secretary Howard Lutnick suggested that Bitcoin will have a “unique status” in any national crypto reserve, and the price of the cryptocurrency rose by nearly 5% in response.

🎨 Art market tariffs: While it is unclear whether President Trump’s recently instituted tariffs will be applied to art, they could be devastating to the international art market, of which 60% comes from the United States and China.

🚀 ICG secondary fund: The London-based asset manager Intermediate Capital Group raised an $11 billion secondary fund, more than double its last fund from 2022, as fundraising for secondaries continues to be robust.

🍷 Expensive bottle of wine: The rapper 50 Cent spent a bit more than his name would suggest, dropping $225,000 on a Napa Valley Markham Vineyards Cabernet Sauvignon at the Houston Rodeo’s fine wine auction.

Google is launching an experimental “AI Mode” in its search engine as it looks to expand its AI footprint and compete with OpenAI and Perplexity. The new mode allows users to ask multi-part and follow-up questions and is an expansion of its relatively new AI overview feature on its search results. Elsewhere, the company is using AI to protect its users, releasing a AI-powered scam detection software for Android that alerts users to likely “conversational scams.” Some of those are probably AI-powered themselves, leading us into a future where “good” AI tools are battling “bad” AI tools.