Less than half, or 44%, of global investors expect private equity and venture capital deal activity to outpace 2019 this year, according to an S&P Global Market Intelligence survey of over 600 deal-makers.

Latin American private equity and venture capital investors are the most optimistic globally, with 67% of respondents to the Private Equity Market Snapshot, or PEMS, survey in the region anticipating an uptick. This compares with 49% in Europe and just 36% in North America.

Sentiment has further deteriorated among the more pessimistic compared with a year ago, the survey found. One-fifth of all respondents anticipate a decline in deal-making over the next 12 months, up from 14% who felt the same last year.

The greatest improvement in outlook was among investors in EMEA, where the proportion anticipating a better year for deals rose 15 percentage points year on year. The biggest decline was seen in North America, where 36% of investors expect a better year in deal terms, compared with 54% who felt the same in 2019.

With this backdrop, 52% of respondents globally will prioritize making new investments in 2020, while 22% will look to manage their existing portfolio. Exits are the priority for just 9%, the survey found.

When polled on risks, economic uncertainty is the biggest concern for portfolio companies in the coming 12 months. Respondents in North America and Latin America, where elections will take place this year, and EMEA investors, where Brexit has dominated the political landscape, consider political upheaval to be the second biggest risk, while protectionism came in second place for Asia Pacific-based respondents.

Room to grow with ESG

Over one-third, or 37%, of global respondents said they were planning to improve environment, social, and governance factors in their current portfolio, while 25% said they did not consider ESG factors.

Broken down geographically, North American investors are laggards in terms of ESG, and less than one-third, 31%, of respondents in the region said their firms did not consider these factors as part of their core strategy. Fourteen percent have begun to establish ESG-related practices, and 29% said they were looking to improve ESG-related factors in their current portfolio.

Private equity governance and investment strategy are in the spotlight ahead of the U.S. 2020 election. Democratic presidential candidate, Massachusetts Sen. Elizabeth Warren, introduced the "Stop Wall Street Looting Act" bill in July 2018, and this aims to "fundamentally reform" the "opaque" industry. Heightened and ever-growing awareness around climate change and environmental issues has also dominated headlines for some time.

In Latin America, 41% of respondents are actively seeking investments in companies with a good ESG track record. Just under one-fifth, 19%, of the region's investors have recently established ESG practices or were not considering them at all.

In the Asia Pacific, 42% of investors expect to improve their ESG policies, while 27% did not consider ESG at all, and 41% of respondents in EMEA are looking to improve ESG across their portfolios, while 21% do not consider these factors.