Managers are finding new sources of capital as institutional appetite for alternative investments weakens

  • Private-market funds are targeting wealthy individuals and families to expand their investor base
  • There are about 520 closed-end private-market funds catering to individual investors with a combined net-asset-value of at least US$350 billion
  • Institutional appetite for alternative investments has weakened, leading to a need for new sources of capital
  • Funds raised for new private-markets funds fell 35% from a peak of about US$1.6 trillion in 2021
  • Private-wealth investors, who have only about 2% of assets allocated to private markets, are seen as a good source of capital
  • Large managers like KKR and Blue Owl Capital are expected to be major players in this sector
  • The rise of ’40 Act funds, which require lower investment minimums and allow investors to take cash out more frequently, is fueling growth from the private-wealth sector
  • Investing in secondaries, investments owned by existing private-equity funds, is becoming popular
  • The market for secondaries has grown as institutional investors sell their private-equity funds to secondary managers
  • Private-wealth investors are considering private markets as they have performed better than public markets

Managers of funds investing in private markets have come up with more creative vehicles to expand their investor base from large institutions to include wealthy individuals and families. There were about 520 closed-end private-market funds catering to individual investors with a combined net-asset-value of at least US$350 billion at the end of last year. One reason for this shift is the weakening institutional appetite for alternative investments, leading major fund managers to seek new sources of capital. Funds raised for new private-markets funds fell 35% from a peak of about US$1.6 trillion in 2021. Private-wealth investors, who have only about 2% of assets allocated to private markets, are seen as a good source of capital to fill the gap. Large managers like KKR and Blue Owl Capital are expected to be major players in this sector. The rise of ’40 Act funds, which require lower investment minimums and allow investors to take cash out more frequently, is fueling growth from the private-wealth sector. Investing in secondaries, investments owned by existing private-equity funds, is becoming popular. The market for secondaries has grown as institutional investors sell their private-equity funds to secondary managers. Private-wealth investors are considering private markets as they have performed better than public markets.

Factuality Level: 7
Factuality Justification: The article provides detailed information about the shift in the private-market sector towards private wealth, including statistics, expert opinions, and examples of specific funds. The information is sourced from reputable firms like Preqin and Hamilton Lane. However, the article could benefit from more diverse perspectives and potential drawbacks of investing in private markets.
Noise Level: 3
Noise Justification: The article provides a detailed analysis of the shift in the private-market sector towards private wealth investors, backed by data and insights from industry experts. It explores the reasons behind this shift, the challenges faced by private-equity funds, and the potential growth opportunities. The article also discusses innovative investment vehicles like ’40 Act funds and provides examples of funds like FlowStone Opportunity Fund. Overall, the article stays focused on the topic, supports its claims with evidence, and offers valuable insights for investors interested in private markets.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses the shift in private-market funds towards targeting private-wealth investors as a new source of capital. This could impact the financial markets by redirecting investment flows and potentially affecting the performance of private-equity funds.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article primarily focuses on the shift in private-market funds towards targeting private-wealth investors, which is a financial topic. There is no mention of any extreme events or their impact.
Public Companies: KKR (Unknown), Blue Owl Capital (Unknown)
Private Companies: FlowStone Partners,Cresset
Key People: Scott Conners (Managing Director and President of FlowStone Partners), Mario Giannini (Executive Co-Chairman of Hamilton Lane)

Reported publicly: www.marketwatch.com