Private Market Evolution Attracts New Participants, Challenges Asset Servicers

Whereas real estate can be considered the original private asset, the asset class now spans multiple markets. “Private credit, private equity, venture capital, infrastructure – all those things are private assets,” Wise said. “One of the things that’s really been interesting the past few years is the explosion in people actually trading private assets, and banks originating private assets. That’s changed the definition, because private assets used to be things that never traded and things that banks were not involved in.” Serra-Janer noted that when she started in the private markets business eight years ago, the predominant strategy was private equity firms, as general partners (GPs), raising capital and actively managing PE funds on behalf of buy-side investment managers, who were passive limited partners (LPs).

“It was really the GPs calling the shots,” she said. “The insurance companies and the traditional asset managers have become very smart in looking for alpha, and they’re demanding more” opportunities to generate higher investment returns, Serra-Janer said. In addition to alpha, buyers and sellers of private assets are also demanding liquidity in a market that historically has been liquidity-challenged. The path to liquidity is through secondaries, where investor stakes, once tied to lockup terms set by GPs, are more frequently changing hands in a rapidly developing marketplace.