The $13+ Trillion Opportunity: Why Private Markets Matter
An iAccess Partners Series: Episode 1/6
Once sidelined as “alternatives”, Private Markets now entail over $13 trillion in assets – and with projections of $18 trillion by 2030, they’re impossible to ignore for any forward-thinking investment strategy.
This is the first of six episodes in our deep-dive into Private Markets, a universe once reserved for mega institutions and the ultra-wealthy and now open to qualified private investors. Along the way in this series, you’ll gain clear, actionable insights:
Why Private Markets are the future: The value proposition of Private Markets and their case for investors.
Why private investors have been missing out: Allocation gaps between institutional and private investors - and the common challenges private investors face.
How to integrate Private Markets into your portfolio: Practical approaches for incorporating this asset class into existing portfolios.
Key takeaways: Episode 1/6
1. Private Markets, with over $13 trillion in assets under management (AUM) and projected to reach $18 trillion by 2030, have surpassed public markets as the leading source of global equity capital.
2. Public markets are in decline, with fewer IPOs, more de-listings, and a growing preference for private capital raises supported by Private-Equity-backed companies.
3. Private Markets cover 80-95% of companies across major regions, giving investors access to a broader and more diverse set of high-growth businesses than traditional public markets.
From "alternative" to mainstream
For decades, Private Markets carried the “alternative investments” label next to public stocks and bonds and has often been considered an exotic addition to portfolios. This definition no longer fits. Between 2014 and 2024, assets under management across Private Equity, Debt, Real Estate, and Infrastructure expanded from about $5.6 trillion to $13.3 trillion, and are on track to reach $17.8 trillion by 2029 (see figure 1). What began as a niche allocation has, over time, become a mainstream source of investment opportunities.
While Private Markets have shown substantial growth in recent years, public markets have not seen a similar trajectory. Companies increasingly prefer to raise money privately instead of through public offerings. Global data confirms a remarkable shift: Since the mid-2010s, annual equity raised in Private Markets has exceeded that raised in public markets.
By 2022, nearly three-quarters of all equity capital worldwide was raised privately, a complete reversal from just one generation earlier, when public markets were the primary funding source.
Private vs. public markets: A shifting landscape
The shift from public to Private Markets has become increasingly evident across multiple geographies. In 2024, only 18 companies listed on the London Stock Exchange - the lowest annual listing volume since 2010, and it coincided with a wave of 88 de-listings, a decrease not seen since the financial crisis. Across the Atlantic, U.S. publicly traded companies have fallen by about 37% over the past 25 years, dropping from roughly 7'000 in 2000 to around 4'400 today (see figure 2). At the same time, the number of Private Equity-backed companies surpassed public listings already in 2007 - and the gap has kept growing since.
This contraction has been accompanied by a shift in IPO characteristics. Whereas 85% of U.S. IPOs in the early 1990s were profitable at the time of listing, only 21% met that standard in 2021 (see figure 3). For investors, this evolving landscape means navigating greater speculative volatility in the public arena, where unprofitable “hype” listings can swing significantly on market sentiment.
Taken together, the decline in public listings and the rise of private capital suggest a fundamental inversion of the traditional funding cycle.
The growing universe of Private Markets
A clear indicator of Private Markets’ breadth is the share of companies that remain privately held. Recent analyses show that 95% of European companies are private, with North America at roughly 87% and Asia at 83% off-exchange (see figure 4). In fact, privately held companies outnumber their public counterparts across every revenue tier, from small- to middle-market businesses up to billion-dollar enterprises (see figure 5).
This underscores how public markets capture only “the tip of the iceberg” of corporate activity, while Private Markets encompass a vast universe of businesses that never appear in public indices.
Investing in Private Markets therefore means gaining exposure to the full breadth of the economy - participating directly in high‑growth and niche companies that drive socioeconomic value. It offers a much broader opportunity set and sector diversification than relying solely on the world’s largest public firms. By tapping into Private Markets, investors can build more resilient, long‑term portfolios.
Private Markets: Why investors can’t afford to ignore them
Private Markets have grown into the primary source of funding for the businesses and projects that drive a substantial part of our economy. Today’s $13+ trillion in AUM represents direct investments in operating businesses, infrastructure assets, real estate portfolios, as well as loans to companies of all sizes to fuel their expansion.
The shift from public to Private Markets has become increasingly prevalent in investor portfolios. A portfolio limited to traditional public stocks and bonds seems to be missing substantial pieces of the puzzle. Following the footsteps of institutional investors, a growing number of private investors now view Private Markets not as a fringe allocation, but as a structural component of a modern portfolio.
As a result, the traditional 60-40 portfolio of stocks and bonds is being increasingly replaced by a 50-30-20 approach, in which investors allocate 20% to top-tier Private Markets managers – capturing the benefits that Private Markets can offer.
Up Next: What's truly in it for investors?
Having seen the shift from public to private assets, we will dive into the key advantages of Private Markets for investors in the next episode of our series. In particular, we will unpack the performance upside and diversification potential of Private Markets - two key drivers that have convinced institutional investors to invest in the asset class for decades.
Newsletter Review | October 2024: How Private Equity Firms Use Add-on Acquisitions To Create Excess Returns
In our newsletter review for October 2024, we dive into the value of add-on acquisitions for Private Equity firms to generate excess returns for their investors.
How Private Equity Firms Use Add-on Acquisitions To Create Excess Returns
Newsletter Review | October 2024
Add-on acquisitions represent 70% of total Private Equity deal count
The strategy of add-on acquisitions has become increasingly prevalent for driving significant growth in portfolio companies. These acquisitions provide a flexible approach for funds to achieve higher valuations for investors at exit:
Main objectives of add-on acquisitions
Capture synergies
A portfolio company can achieve revenue growth through add-on acquisitions by cross-selling compatible products to customers and expanding into new markets, while also realizing cost reductions through economies of scale, which lower production costs at higher volumes.
Achieve higher valuations
Since add-on acquisitions can significantly enhance a company's future organic growth potential, a well-executed add-on strategy can lead to operational improvements and ultimately to increased EBITDA and a higher valuation for investors at exit.
60% of modern value creation in Private Equity is linked to operational improvements
Research from UBS and EY shows that 60%of modern value creation in Private Markets is linked to operational improvements. Fund managers who actively focus on developing portfolio companies to their fullest potential throughout the investment life cycle create the greatest value.
