The democratisation of investment in the unlisted market: the industry’s second wind?


Our experts Julien Aïdan and Amandine Bozier explain why the democratisation of private markets can be described as a new Eldorado for the industry after mixed results in 2022 and take a look at its benefits for individual investors. They tell us how this sector has become strategic for asset servicers and how to deal with the challenges that arise to meet the needs of this growing market.

2023: a pivotal year for Private Markets funds1

2022 was a mixed year, marked by a significant slowdown in the ability of management companies to raise funds from investors.

In an inflationary environment, accompanied by an increase in interest rates and sabre-rattling at Europe’s door, the promise of returns for natural investors in the unlisted market (i.e. professionals or institutional investors) has dissipated. The real economy is seizing up, and with it Private Equity, Infrastructure and Real Estate projects. Many asset management companies postpone their plans to launch funds in order to be able to launch them more effectively later.

On a global scale, this slowdown in unlisted transactions was partially offset by private debt fund transactions of USD 100 billion2, which did not, however, reverse the trend. In addition, the dry powder, representing all the amounts committed but not yet called by asset managers, reached a record high at the end of 2022 of USD 3,700 billion3 worldwide.

As a result, 2023 is the year in which the unlisted industry will have to turn to individual investors to weather the storm!

The democratisation of the unlisted market; a new Eldorado for the industry, certainly… But what’s in it for individual investors?

Two key figures summarise the potential of individual investors for the alternative investment fund industry:

  • 50%, representing the share of individual investments in all4 investment funds under management;

  • 16%,5 representing only the share of these same investments in alternative investment funds.

The market for individual investors is therefore huge; it would allow fund managers in the unlisted market to restart the machine that has lost momentum.

There are many reasons why individual investors (and their advisors) should diversify:

  • The historical yield of the unlisted market has always been higher than that of traditional financial markets (for example, over the past 25 years, private equity has yielded 14% vs. 7%6 for equities listed on the MSCI Index World).

  • The traditional allocation between equities and bonds is no longer sufficient to protect against a decline on the financial markets, given that these two asset classes no longer systematically move in opposite directions. The unlisted market is therefore a true marker of diversification for this category of investors.

  • In addition, investing on the unlisted market enables investors to fulfil their strong desire to give “meaning” to their savings by investing directly in the real economy, particularly in sustainable development strategies.

What about individual investors? How can they be guided in their investments in these asset classes?

The financial industry typically divides individual investors into four categories:

  1. Ultra High Net Worth Individuals (UHNWIs), with available assets exceeding USD 30 million;

  2. Very High Net Worth Individuals (VHNWIs), with available assets exceeding USD 5 million;

  3. High Net Worth Individuals (HNWIs), with assets available between USD 1 million and USD 5 million 

  4. The mass affluent segment, with available assets of less than USD 1 million.

However, if market participants in the unlisted market (i.e. asset management companies, distributors, wealth advisors and asset servicers) want to be able to address all of these categories of individual investors, and particularly mass affluent investors, they must work together to break down several barriers and facilitate access to these asset classes.

More specifically, the regulatory (entry ticket level), technological (multiple dedicated platforms) and financial (liquidity management or limited commissions) conditions must be met.

The European Parliament's adoption of ELTIF regulation7 2.0 on 15 February paves the way for massive democratisation by removing the minimum entry ticket of EUR 10,000.

How can we meet the challenges of this democratisation?

Initially a niche activity, the unlisted sector has become a strategic segment for asset servicers to meet the needs of this growing market.

There are many challenges for players in this sector, who have historically managed limited volumes for professionals or similar clients, familiar with these complex investment processes:

  • Fund distribution is the first challenge: in this regard, the emergence of subscription platforms provides valuable assistance to asset managers by offering major technological support.

  • The cross-border master/feeder pattern is becoming more normalised, with lower entry tickets for feeders making it possible to capture investments from the general public.

  • The management of KYCon large volumes, often still manual, is also a major challenge. Artificial intelligence partly enables us to meet this industrialisation challenge.

  • Managing flows (capital calls, distributions) on significant volumes is another daily challenge. Developing APIs9 to interface the systems of the players in the chain is becoming the norm. Direct debit is now offered to investors to facilitate capital calls from these less experienced clients, thus securing the proper receipt of funds.

  • For a type of investment that is by nature illiquid, the valuation frequency is increasing in order to provide a closer net asset value to management companies and thus enable them to meet investors' liquidity needs.

  • The final challenge is that some asset managers, wishing to focus on their core business of asset management, choose to outsource middle office tasks to asset servicers.


2023 is a pivotal year for the industry in order to pave the way for a massive democratisation of the unlisted market. Over the past few years, SGSS has developed a dedicated unlisted unit, whose regularly improved offering has been supplemented by an advanced Middle Office service in order to support its clients in meeting their expectations as closely as possible.

Discover our Alternative Fund Services.

Julien Aïdan & Amandine Bozier, Product Engineers on Private Equity & Real Estate funds, Societe Generale Securities Services

1Private Markets: Private Equity, Real Estate, Infrastructure or Private Debt
2Les Echos 27/02/23
3 Les Echos 27/02/23
4Bain & Company estimates USD 275 billion to USD 295 billion in assets under management worldwide
5Bain & Company
6 Bain & Company
7ELTIF: European long-term investment fund
8 Know Your Client
9Application Programming Interface


  1. Global Private Equity Report 2023; Bain & Company
  2. Private equity marked by the slowdown in late 2022; Les Echos, 27/02/2023
  3. Private Equity: Moving towards market retailisation? Cabinet Frame, April 2022
  4. Making private equity accessible; France Invest, September 2022
  5. The challenges of outsourcing to support the development of the unlisted market; Option Finance September 2022