Aerial view of the Paternoster Column in London, United Kingdom
Aerial view of the Paternoster Column in London, United Kingdom
Closer to home, the London Stock Exchange lost 88 companies – the largest exodus since the global financial crisis. 14 were taken private, in transactions worth tens of $billions. An example is Darktrace, a global leader in cybersecurity AI and, until a couple of years ago, one of the UK’s fastest-growing technology companies. Last October, US-based private equity giant Thoma Bravo acquired it for approximately $5.3 billion.
Global stock markets are shrinking. Last year alone, they saw a net decline of over $120 billion – three times the total of the previous year. This was mainly driven by a surge in delisting.
Meanwhile, the global IPO (initial public offering) market remains in a rut. Between 1980 and 2000, an average of more than 300 companies a year went public in the US. Since then, the figure is less than 100. A similar trend has played out across the globe.
As a result, increasingly, some of the best growth stories are happening beyond the stock exchange. Of the 159,000 companies generating $100 million or more in annual revenue, around 140,000, or 88%, are privately owned.
Put another way, investors limiting their choice to public equities and bonds risk missing out.
Private equity: the best party in town (but individual investors weren’t invited)?
That vast swathe of growing private companies is the hunting ground of private equity funds. These funds, which have been around for decades, raise capital to buy companies with the aim of growing the business and eventually selling it at a profit.
And this has so far worked out handsomely: in the 25 years from 1999 to 2024, annualised returns on private equity funds surpassed global listed equity funds by 7.3% a year. Put differently, a $10,000 investment in a basket of private equity funds could have grown to c.$200,000 over 25 years. That compares to c.$37,000 from an equivalent investment in global listed equities. Of course, the usual caveat on past performance applies: it’s not a guide to the future.
There’s a snag. Individual investors have been confined to watch this performance from the sidelines.
Until recently, access to private equity funds has been severely restricted due to high investment minimums (typically millions of US dollars), complex regulatory frameworks, and a requirement to lock up capital for 10 years or more.
Unsurprisingly, the only investors able to satisfy those demanding entry prerequisites – and benefit from those returns – were ultra high net worth individuals or institutional investors like pension funds, endowments, sovereign wealth funds and large financial corporations.
Barriers finally coming down for individual investors
A major catalyst for change is the emergence of semi-liquid or evergreen private markets funds. These are private markets investment vehicles structured similarly to unit trusts with a few more restrictions. Capital can be invested at regular intervals and there are periodic liquidity windows (usually once a quarter), compared to a 10-year capital lock-up typical for conventional private markets funds, though a long-term horizon is still encouraged.
Minimum investment thresholds can be as low as £10,000, compared to $5-$10 million for traditional private markets funds.
Many of the world’s leading private equity and alternative investment managers are creating evergreen versions of their flagship funds for private investors.
EQT, Europe’s largest private equity firm, has developed the Nexus platform designed specifically for this segment. Brookfield and Oaktree, leaders in alternative assets and private credit, have joined forces to create Brookfield Oaktree Wealth Solutions, which aims to deliver institutional-quality investment opportunities to private investors. World-leading secondaries investor Lexington Partners, part of Franklin Templeton, is also opening up its offering.
Private investors are increasingly embracing these innovative structures, which have become one of the fastest-growing segments of the asset management industry. In the U.S. alone, net assets under management totalled $381 billion across 351 semi-liquid evergreen funds as of Q3 2024, with more than half of these funds having been launched in the last four years.
What was once the domain of institutional giants is opening up to individuals looking to diversify their portfolios beyond equities and bonds.
With new fund structures, lower entry points, and a plethora of credible funds available, the door to private equity and other private assets is no longer sealed shut.
Want to learn more? Free guide to investing in Private Equity
If you are an experienced investor curious about Private Equity and how you might now be able to access this asset class, Wealth Club has produced a comprehensive free guide: “Investing in Private Equity and Private Markets”.
This guide explains what Private Markets and Private Equity are, how they work, the potential benefits, and importantly, the risks involved. It also details how eligible investors could potentially invest from just £10,000.
Private Markets investments are high risk and illiquid. You could lose your capital. Only High Net Worth Individuals or Sophisticated Investors are eligible to invest. Promotion issued by Wealth Club Ltd, a non-advisory service.
