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


Our experts Julien Aïdan and Amandine Bozier explain why 2024 can be considered a pivotal year for Private Markets funds after two consecutive years of slowdown.

2024: a pivotal year for Private Markets funds1 after two consecutive years of slowdown

In an inflationary environment, accompanied with higher interest rates and an unstable geopolitical context, the promise of returns for natural investors in the unlisted market (i.e. professionals investors) has dissipated. The real economy is seizing up, and with it Private markets projects especially Real Estate ones. Many asset management companies have postponed their plans to launch funds later. On a global scale, this slowdown in unlisted transactions was partially offset by private debt fund transactions of USD 195 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 2023 of more than USD 3,900 billion3 worldwide.

As a result, 2024 will be the year in which the unlisted industry will have to turn more than ever 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 huge; opening the unlisted market to this category of investors would allow fund managers in the unlisted market to restart the machine that has lost momentum.

The interest for individual investors is multiple:

  • A historical yield higher than traditional markets

  • A new tool of diversification

  • An ability to give “meaning” to their investment by investing directly in the real economy, particularly in sustainable development strategies.

To address individual investors, and particularly mass affluent investors6, the regulatory (entry ticket level), technological (multiple dedicated platforms) and financial (liquidity management or limited commissions) conditions must be met. The entry into force of ELTIF7 regulation 2.0 on 10 January paves the way for massive democratisation by on one hand removing the minimum entry ticket of EUR 10,000 and on the other hand extending the investment universe for asset managers.

How can we meet the challenges of this democratisation?

There challenges are multiples for players in this sector, who have historically managed limited volumes for professionals or similar clients:

  • Fund distribution is the first challenge: 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 retail investors.

  • The management of KYC8 on 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 a 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.

  • 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.

What next?

2024 will therefore be a pivotal year for the industry in order to pave the way for a massive democratisation of the unlisted market. Consequently, it should open up the road to attend the end of the slowdown of fundraising in private markets. In coming years, to meet liquidity needs of this new type of investors, we might also see a development of a secondary transactions’ market along with all private market stakeholders.


Julien Aïdan & Amandine Bozier,
Product Engineers on PE/RE funds, Societe Generale Securities Services


  1. Global Private Equity Report 2023; Bain & Company
  2. Making private equity accessible; France Invest, September 2022
  3. The challenges of outsourcing to support the development of the unlisted market; Option Finance September 2022
  4. Preqin

[1] Private Markets: Private Equity, Real Estate, Infrastructure or Private Debt
[2] Preqin
[3] Preqin
[4] Bain & Company estimates USD 275 billion to USD 295 billion in assets under management worldwide
[5] Bain & Company
[6] Mass affluent investors represent investors with less than USD 1 million of assets
[7] ELTIF: European long-term investment fund
[8] Know Your Client
[9] Application Programming Interface