Top-tier investments now lie off the public exchange
==============================================================================
A new study by The Wealth Club has revealed that a significant proportion of private market fund managers expect a dramatic increase in the number of privately-held firms. The study, which surveyed 159,000 firms globally with revenues over $100m, found that nearly nine out of ten (87%) private market fund managers anticipate the percentage of privately-held companies to increase.
According to the study, the majority of private market fund managers anticipate an increase in the number of privately-held companies. This shift towards private markets is seen as a positive development by the fund managers, with 97% of them believing that the increase in privately-held companies has significant implications for investment opportunities.
The study suggests that the private credit market is predicted to be stronger in 2025 than it was in the previous year. This statement implies an optimistic outlook for the growth and strength of the private credit market.
Alex Davies, chief executive of Wealth Club, notes that this is changing, implying a shift towards making private market opportunities more accessible to individual investors. Davies states that private markets are where the most compelling investment opportunities are found today.
The key reasons cited by private fund managers for preferring private markets over publicly-listed markets include faster growth and longer private life, concentration and regulation in public markets, diverse and tailored financing, outperformance and diversification, and the expansion of private companies and assets.
Many companies achieve significant growth without going public, allowing private investors to capture value earlier and over longer periods. Public markets have become more concentrated with fewer listed companies, and public companies face heavy regulatory and shareholder pressure leading to short-termism, which can limit long-term innovation and growth.
Private markets offer customized financing and partnership approaches unavailable in public markets, benefiting companies and investors seeking long-term growth. Historical data show that private equity tends to outperform small-cap public indices by approximately six percentage points annually over five to ten years, adding diversification and potential returns beyond public market exposure.
The number of private equity-backed companies has grown significantly, with private markets assets under management reaching trillions globally, reflecting increased investor demand and opportunities.
The Wealth Club survey indicates that private markets are becoming increasingly attractive for investors seeking higher returns due to the shift away from publicly-listed markets. Almost half (46%) of the surveyed fund managers expect the switch away from publicly-listed markets to increase dramatically. A further 39% of the fund managers predict a slight increase in the shift away from publicly-listed markets.
The study found that 97% of private market fund managers think the increase in privately-held companies and the rise in non-traditional lending make public markets less compelling for investments. The text does not mention any potential challenges or risks associated with the "retailisation" of evergreen funds.
In summary, private fund managers see private markets as a new frontier for investment. The combination of higher growth potential, reduced competitive pressure from public markets, regulatory advantages, and diversification benefits altogether make their investments more compelling than publicly-listed alternatives.
Investing in the private market seems to be a favored choice among business leaders, as 87% of private market fund managers anticipate an increase in the percentage of privately-held companies. This trend towards private markets offers promising opportunities for finance, with 97% of the fund managers believing that the increase in privately-held companies significantly impacts investment opportunities.
