For the last three decades, GPs have catered almost exclusively to institutional investors. Now though, family offices and HNW investors – extending to the mass affluent – are the focus of new fundraising efforts.
In their 2023 report, Bain & Company estimated that individual investors hold roughly 50% of the estimated $275 trillion to $295 trillion in global assets under management, of which only 16% is in alternative assets.
At the recent IPEM Cannes Wealth event 76% of respondents within the IPEM community said they expected private wealth to account for 10% to 25% of total private equity fundraising by 2028.
“We still believe we’re on a path integrating private markets into clients’ portfolios, whether it is advisory or discretionary. There are great stories to tell clients; making them aware of liquidity constraints but also making them aware of what actually private equity, private credit, infrastructure is,” commented Jan-Marc Fergg, Global Head Managed Solutions & ESG, HSBC Private Bank. Fergg was speaking on the panel session, “The Wealth Revolution – From Pioneering Roots To Mainstream Reality.”
Private wealth is so compelling to global GPs precisely because of the untapped potential on offer. It accounts for 50% of total global assets and at an upper estimated size of $150 trillion, represents a bigger pool of capital than institutional capital: see figure 1.
A report by iCapital and Boston Consulting Group in 2022 suggested that investment by high net worths into private equity was expected to reach $1.2 trillion by 2025.
One can begin to appreciate why the wealth space is so important to private markets participants when considering the fact that HNW assets total $60 trillion; that’s nearly twice as much as global pension fund assets.
Established names such as Ardian, KKR, Apollo, Eurazeo and HarbourVest have taken a first mover approach, cognisant of the fact that private investors are key to their growth plans.
Partners Group were the first to innovate the ‘Evergreen’ fund structure back in 2001. This type of fund vehicle allows for ongoing subscriptions and redemptions, making it more accessible and flexible for individual investors compared to traditional closed-end private equity funds.
Today, Blackstone is at the vanguard of this democratisation trend, managing approximately $241 billion for individual investors, followed by KKR with around $70 billion in AUM from individual investors, and Ares Management, with around $65 billion in AUM. KKR expects up to 50% of new capital raised to come from private wealth.
This is a trend that is only just beginning to gain traction.
As the chart below in Figure 2 reveals, private wealth assets in global alternatives are forecast to grow 12% p.a. between 2022 and 2032. Moreover, fund structuring initiatives such as the updated ELTIF 2.0 in Europe and the LTAF in the UK are making this an easier proposition for fund managers.
The Market Today
Evergreen adoption is growing but it remains a nascent market. The hype cycle has only really just started.
One estimate (https://www.investmentexecutive.com/newspaper_/focus-on-products/evergreen-funds-are-gaining-in-popularity-heres-why/) puts the total number of evergreens at over 500 funds, managing a combined $350 billion in assets.
A number of leading private markets institutions now offer a range of hybrid or evergreen fund structures.
Ardian launched its Private Wealth Solutions business in 2020. The first evergreen fund - Ardian Access Solution - was designed for the French market that same year. In 2022 it launched the Ardian Clean Energy Evergreen Fund and over the next 12 months Ardian is looking to launch three new solutions as investor dynamics continue to build.
In June 2024, Carlyle announced the launch of a new evergreen private equity strategy, Carlyle AlpInvest Private Markets SICAV. Neuberger Berman currently offers three closed-ended ELTIFs. In 2023 it launched a private equity evergreen fund - NB Private Markets Access Fund – which now has more than $1 billion in net assets.
Pantheon has added to its $7 billion global private wealth platform with its Pantheon Global Private Equity Fund giving investors access to a diversified programme of secondaries and co-investments across the US and European middle market. State Street too has also announced a partnership with Apollo to launch an exchange-traded fund and other products focused on private credit.
In September 2024 a new partnership announced between BlackRock and Partners Group1 which will introduce a model portfolio to private wealth investors. The following month Hg, one of Europe’s pre-eminent private equity firms, launched Fusion, an open-ended evergreen fund to provide non-US private investors access to Hg’s private market strategies. The Fusion fund has already surpassed $1 billion in AUM.
To tap in to growing private wealth demand, in 2023 Rothschild and Co established a new Private Markets Group within its wealth and asset management division, headed up by Jessica Sellam, to offer discretionary mandates to clients.
At Union Bancaire Privée, the bank’s private markets group has grown into a 33-person strong team, investing across private debt, infrastructure, private equity and real estate. It now has six evergreen funds on its platform.
“This needs to be a very comprehensive package offered to LP's,” comments Gaetan Aversano, Deputy Head, Private Markets Group, Union Bancaire Privée. “From designing the right product, to being able to provide education materials, to support on road shows, to having internal people within their legal team that can draft distribution agreements that meet the requirements of banks, to providing the right type of reporting required by high net worth individuals. It is an enormous market opportunity for GPs, but at the same time this isn’t a case of going after low hanging fruit. It relies upon a well-orchestrated long-term strategy.”
In a recent survey conducted by Hamilton Lane, which canvassed the views of some 300 wealth advisors,
60% said the intention was to have 10% or more of their clients’ underlying assets in private markets.
“We got into the private wealth business six years ago, starting in the UK and Switzerland. We have five funds with EUR9 billion of assets across those funds. Adoption has grown substantially but making it easy for clients is absolutely critical,” said Richard Hope, Global Co-head of Investments at Hamilton Lane, during IPEM Cannes Wealth 2025. He was speaking on the panel “Trends & Prospects In European Wealth Channels”.
Some 30% of survey respondents said that they would increase evergreens to 20% of their clients’ portfolios, noting that being able to include evergreens was helping to improve conversations with their clients.
‘It’s a long-term asset class but when you’re dealing with clients who can be short-term in their decision-making that changes the game and how we behave in terms of the portfolios we are building, and the investment experience we are providing,” added Hope.
“I think it’s a combination of private markets being an attractive asset opportunity and the desire for improved long-term outcomes in their portfolios. The opportunity today is probably more attractive for the smallest investors but I would say over the last 20 years, we have worked on democratising that opportunity for more people by building better tools to help plan and build portfolios that scale to a more reasonably sized portfolio,” commented Joshua Helfat - Head of Private Investments, Global Alternative Investment Solutions, JP Morgan Private Bank during the panel session “Private Wealth Potential: Talkin’ ‘Bout a Revolution”.
Future Growth Outlook
Access to private markets has certainly improved. And will need to continue to improve. This is being helped by the fact that fund structuring initiatives such as the updated ELTIF 2.0 in Europe and the LTAF in the UK present an easier proposition for fund managers when it comes to structuring and marketing evergreens to retail investors.
Technology too is improving, providing the scaffolding needed to support retail investment.
Leading fintech platforms like iCapital, which has grown to $240 billion of global platform assets,
have a clear vantage point to see how, and where, the evergreen marketplace is enjoying the most significant growth.
Daniel Imhof, Head of Client Solutions EMEA, iCapital, revealed that last year, private credit was the key growth driver, accounting for around 45% of net new flows; up from 36% the prior year. “Lately, we see a bit more interest in distressed and opportunistic credit. Private equity was the second biggest growth driver, accounting for 36% of flow. And within private equity, it has mostly been in secondaries and co-invests. We’ve also seen a huge surge of interest in infrastructure funds,” he said.
Fabio Osta, Managing Director, Blackrock, echoed this. He said the firm expects to see significant growth in credit and infrastructure: “They represent 20% of the market today, but we expect that to grow to 30%.”
The fact that private companies are staying private for longer is another key aspect for why private wealth interest in private markets is growing.
Many are generating significant economic growth before they go public. Individual investors are missing out on a significant part of the economy if they’re not investing in private markets. That means banks and wealth managers are increasingly integrating private market assets into public market portfolios of their clients. Sophisticated analytical tools that can simulate scenarios or outcomes based on client profiles are crucial to extending the market opportunity for evergreens.
“Alternatives are not just an alternative any more .. and if you’re not taking into account private markets, you’re betting against private markets. We’re moving from a 50/50, 60/40 portfolio to a 50/30/20 portfolio, where 20% is in private markets,” said Imhof.
The general sentiment among private wealth partners is that there is clear evidence of growing demand among HNW investors to increase their portfolio exposure to private markets. This is a demand-driven trend as much as it is a supply-driven one.
HSBC’s Fergg referenced two important catalysts for why evergreens have taken off:
For most HNW investors the percentage of portfolio assets in private markets remains very low; around 2%.
However, as the barriers to access crumble, this could translate into a meaningful percentage increase.
Raluca Jochmann, Managing Director, Head of Private Markets Solutions at Allianz Global Investors pointed to the importance of diversification. “There is definitely a trend towards increasing asset allocations of private individuals to private markets as it has been in the institutional space. It’s just copying what worked for institutions to private individuals,” she remarked at IPEM Cannes Wealth.
Once the floodgates open, private markets firms will have to come up with solutions that actually solve for scale and provide a seamless, efficient user experience.
There are risks that could scupper the market too: namely the mis-selling of products and the fact that there are so many new products being launched. Some GPs are doing this in a reasoned, conscious way but as was noted by Greta Teot, Head of Private Markets, Mediobanca, “there are other GPs launching new products from scratch. From outside they all look very similar. My fear is something happens with one of these new GPs, which resonates and impacts the whole market for evergreens.”
“Find your lane, own it, but listen to the market. Don’t sit in an ivory tower,” remarked Shane Clifford, Partner and Head of Global Wealth at Carlyle.