With public stock markets contracting, where can investors look for expansion?

More and more businesses are going private, including Royal Mail, Skechers, Darktrace, and

But there is still hope for investors. It's no longer illegal to invest in private companies, and you can start with as little as 10,000.

Stock markets around the world are contracting. Their net loss was more than £120 billion last year alone, which is three times what it was the year before. The primary cause of this was an increase in delisting.

Nearer home, the London Stock Exchange saw the biggest exodus since the global financial crisis, losing 88 companies. In deals valued at tens of billions of dollars, 14 were taken private. As an illustration, consider Darktrace, a leader in cybersecurity AI on a global scale and, until recently, one of the fastest-growing tech firms in the UK1. It was purchased by Thoma Bravo, a massive private equity firm based in the US, for about £5.3 billion last October.

At the same time, the global initial public offering (IPO) market is still stagnant. An average of over 300 US companies went public annually between 1980 and 2000. Since then, the number has fallen below 1002. All around the world, a similar pattern has emerged.

Because of this, more and more of the most impressive growth stories are taking place outside of the stock exchange. Of the 159,000 businesses that make £100 million or more a year, about 140,000or 88 percentare privately held.

In other words, investors run the risk of losing out if they restrict their options to public stocks and bonds.

Individual investors were not invited to the best party in town, which is private equity.

Private equity funds target that huge area of expanding private businesses. Having existed for decades, these funds raise money to purchase businesses with the intention of expanding them and then selling them for a profit.

For the 25 years between 1999 and 2024, the annualized returns of private equity funds outperformed those of global listed equity funds by 7.3 percent annually. This has so far proven to be a profitable strategy. In other words, a £10,000 investment in a collection of private equity funds might have increased to c. £200,000 spread out over 25 years. That is equivalent to c. £37,000 from a comparable investment in stocks that are listed internationally. Naturally, the adage "past performance is not a guide to the future" is applicable.

There's a catch. Investors on the sidelines have been forced to observe this performance.

Due to complicated regulatory frameworks, high investment minimums (usually millions of US dollars), and the need to lock up capital for ten years or more, access to private equity funds was severely limited until recently.

Remarkably, only extremely wealthy individuals or institutional investors such as pension funds, endowments, sovereign wealth funds, and major financial firms were able to meet those stringent entry requirements and profit from those returns.

At last, though, things are turning around.

For individual investors, barriers are finally being removed.

The advent of semi-liquid or evergreen private markets funds is a significant change agent. These are investment vehicles for private markets that resemble unit trusts in structure but have a few additional limitations. In contrast to the 10-year capital lock-up that is typical of traditional private markets funds, capital can be invested at regular intervals and there are periodic liquidity windows (typically once every quarter), though a long-term horizon is still encouraged.

While traditional private markets funds require investments of £5£10 million, minimum investment thresholds can be as low as £10,000.

For private investors, many of the top private equity and alternative investment managers in the world are developing evergreen versions of their flagship funds.

For this market, the Nexus platform was created by EQT, the biggest private equity firm in Europe. The goal of Brookfield Oaktree Wealth Solutions, a joint venture between alternative asset and private credit leaders Brookfield and Oaktree, is to provide private investors with institutional-caliber investment options. Franklin Templeton subsidiary Lexington Partners, a top global secondaries investor, is also expanding its offering.

These cutting-edge structures, which are now among the asset management industry's fastest-growing subsectors, are being adopted by private investors more and more. In the United States... S. In Q3 2024, 351 semi-liquid evergreen funds had £381 billion in net assets under management, with over half of these funds having been established within the previous four years.

For those who want to diversify their portfolios beyond stocks and bonds, what was previously the purview of institutional giants is now becoming accessible.

The access to private equity and other private assets is no longer restricted due to the availability of numerous trustworthy funds, new fund structures, and lower entry barriers.

Want to know more? Check out our free guide to private equity investing.

Guide to the Wealth Club.

Wealth Club has created a thorough free guide called "Investing in Private Equity and Private Markets" for seasoned investors who are interested in learning more about private equity and how they might now be able to access this asset class.

What private markets and private equity are, how they operate, the possible advantages, andmost importantlythe risks are all explained in this guide. It also describes how qualified investors could make an investment with as little as £10,000.

Disclaimer: Investing in the private markets carries a high risk and lacks liquidity. Your capital might be lost. Only wealthy people or experienced investors are permitted to make investments. promotion from the non-advisory service Wealth Club Ltd.

Three PE sponsors appear on the Wealth Club logo.