The rise of the private investor in private markets

How have you seen capital raising evolve over the last few months?

David Zerbib: Sentiment in the last few months has certainly changed for the better. Inflation fears have slowly made way for cautious optimism spurred by major central banks starting their rate-cut cycles.Additionally, and certainly a more long-term driver, there’s no doubt that private investors are increasingly finding their way to private markets, an asset class historically dominated by large institutional investors. While we have been managing evergreen funds for over two decades, the “frenzy” of evergreen funds launched in recent years has only accelerated the adoption by private investors and therefore encouraged distribution partners such as banks to build a suitable offering for their clients, across both traditional closed-ended products and, increasingly so, evergreens. I honestly don’t think there’s any bank I’m talking to across the region that isn’t interested in building out their private markets offering

To what extent are individual investors important in your distribution strategy?

David Zerbib: The short answer? Very important.

As a pioneer in evergreen solutions, we’ve historically always had a good amount of private investors. Looking forward, I think we can all agree that allocations from private investors are increasing from where they currently are. Whether their portfolio allocation moves to 3, 5 or 10%, that represents an enormous, trillion-euro opportunity, which clearly we want to support. As indicated prior, we have seen a surge in new private market products being launched by our peers. In 2020-2023, by our count, 34¹ new evergreens were launched. To put this into perspective, this compares to 26² in the 20 (!) years prior. Investors will need to remain critical and look for a few key elements in the evergreen funds they invest in; best-in-class investment content, a pro rata allocation policy, sound and transparent valuation processes, a proven ability manage liquidity within the portfolio and an ability to diversify investment vintages!

What are the key distribution challenges you are currently facing?

David Zerbib: I think as an industry, we carry a huge responsibility towards our investors. While I personally believe it’s fantastic that we provide private individuals with the same access to the asset class and potential returns as institutional investors; this doesn’t come without its own set of challenges. Investor education to me personally is crucial for individuals looking to invest in evergreen private market funds.

These funds offer long-term investment opportunities but are sometimes less understood than their public market counterparts. As mutual funds in public markets celebrate their 100th anniversary this year, it is important for investors to realise that private market funds operate differently and require a deeper understanding of their unique dynamics. Topics such as liquidity features, risk- return expectations and how these funds fit into a broader portfolio will be key in optimising the opportunities presented by evergreen private market funds. You’ll notice that Partners Group has a large, dedicated team catering to the private wealth segment. This allows us to sufficiently support our distribution partners and investors with educational topics where needed. We frequently host private market academies, webinars, and publish white papers to increase investors’ expertise!

We strongly believe that, with the correct structure and support, evergreens will provide private investors with an excellent and convenient way of investing in private assets! 

Can we talk about democratisation without thinking about distribution channels?

David Zerbib: Another major challenge lies in reaching out to non-professional investors. In this respect, the ELTIF 2.0 format is a real game changer. Already a pioneer in the creation of ELTIF Closed-End funds a few years ago, Partners Group launched its first Evergreen Private Equity fund in ELTIF format in 2024. This structure gives immediate access to non-professional clients, avoiding the need for intermediary structures.

But it’s clear that when we aim to be a major player in the French savings landscape, it’s essential to offer our historic Evergreen expertise within French life insurance.

With these two distribution channels, we can truly use the term democratisation for private markets

David Zerbib, Head of Private Wealth France, Partners Group

¹Partners Group Internal Data
²Partners Group Internal Data