Private markets are becoming more accessible to individual investors and are now the real drivers of the global economy, according to Partners Group, a $142 billion international private markets firm.

Previously, private market investments were largely only available to institutional investors, but many of these investment opportunities have opencould be missing a huge opportunity, Robert Collins, co-head of private wealth at Partners Group, said in an interview.

“Going public” used to be the mark of success for a company, but that is no longer the case, Collins argued. Successful private companies often have no desire to be publically traded, but rather want to stay focused on raising private capital. In most cases, the private market investments outperform public market returns, he added.

“Today, the IPO companies are the speculative, unproven market for the retail investor. Public markets and private markets have switched places as drivers of the global economy,” Collins said. “The real opportunities for growth are in private markets. Private market investments provide opportunities for investors that are not available in public markets.”

“As we have seen in previous downturns, we believe that private markets will continue, on a relative basis, to outperform public markets, and a more difficult market environment will not reverse the trend,” he added.

Even in 2020, when many private market investors paused their investment activity because of the pandemic, private market fundraising totaled nearly $1 trillion and exceeded the approximately $800 billion raised in public markets, Partners Group said in a recently released whitepaper, “Private Markets: The New Traditional Asset Class.”

“As the pandemic waned, private markets surged again, and private equity fundraising reached another all-time high in 2021. In the challenging macroeconomic environment of 2022, private equity fundraising dipped by an estimated 21.5 %, but still exhibited greater resilience than public markets,” Partners Group said.

Investing in private markets used to require a $2 million to $5 million investment. Now that number has been lowered to approximately $50,000 for some funds  – still a hefty sum for more investors, but no longer the province of pension funds and foundations, Collins said.

Investors who ignore private markets are missing out on a large segment of investment assets. In order for a portfolio to be successfully aligned with foundational companies, investors “must increasingly consider whether, as we believe, private markets are the best route to many real economy assets,” Partners Group said. “Private markets have become the custodians of the real economy, owning and building foundational companies, real estate assets and infrastructure, (and have therefore) taken on the mantle once mostly held by public companies.”

Active private markets firms in particular will be at the core of driving these new ecosystems, working with businesses to develop the agility and adaptability needed to build our future sustainable economy, Partners Group predicted.

Partners Group now has over $40 billion in regulated, evergreen, and individual-focused investment programs, which represents around 30% of the firm's total AUM.  The firm also developed new products, such as the first ‘40 Act Fund launched in the U.S. in 2009 and the first European Long Term Investment Fund distributed to private individuals in 2017. The firm works with financial advisors, RIAs, wirehouses and banks to offer private equity investments.

Others also have been developing evergreen private equity funds.Evergreen refers to investment vehicles that have limited liquidity features.

“With an estimated total capital value of $30 trillion by the end of the next (economic) cycle, private markets will be too big to be ignored by any relevant player in the financial services industry,” Partners Group said.

Partners Group became involved in the private equity evergreen market in the U.S. when a multifamily office client of the firm expressed an interest in getting involved in private investments wrgreen market.

“There has been a profound shift between public markets and private markets,” Collins said. “Private markets now are the drivers of the overall economy, and investors should take advantage of the opportunities they provide. These assets are not for every investor, but for many, private market assets are necessary to create a truly diversified portfolio.”