How Private Markets Are Evolving to Overcome Challenges and Invest in a Shifting Economic Landscape of Opportunity
Private markets have long been a cornerstone of global capital allocation, providing companies with access to patient capital while offering investors opportunities for outsized returns. In 2024, private markets are undergoing significant transformation as they adapt to macroeconomic pressures, regulatory shifts, and evolving investor priorities. Despite challenges such as rising interest rates and constrained liquidity, private equity (PE), private credit, infrastructure funds, and secondary are finding innovative ways to thrive.
This article explores the key trends shaping private markets in 2024 and beyond, including the rise of private credit, the growing importance of secondary, and the increasing role of technology in enhancing transparency and efficiency. It also provides actionable insights for investors and fund managers looking to navigate this dynamic environment.
The Resilience of Private Markets in 2024: Key Trends, Growth Drivers, and Portfolio Insights
Private Equity Fundraising Rebounds
Private equity remains a dominant force in private markets, with $366 billion raised globally in the first half of 2024—a 10% increase over the same period in 2023 (source), the market is expected to continue its rebound well into 2025. However, this figure is still well below the record highs of 2021, reflecting ongoing challenges such as elongated holding periods and a lack of exits.
- The Trend in Private Investment: Larger funds are capturing a disproportionate share of capital in the private market investing space. In the first half of 2024, the top ten PE funds accounted for over 35% of aggregate fundraising, continuing a trend toward concentration among established players (source).
- Insight: For smaller funds, differentiation through niche strategies or sector expertise is becoming essential to attract limited partners (LPs).
- The Expansion of Private Credit
Private credit has grown significantly as regulatory constraints cause traditional lending banks to pull back. Direct lenders accounted for 57% of buyout loan volume in the first half of 2024, up from 49% in 2022 (source).
- Emerging Opportunities: Asset-based lending (e.g., aircraft loans and equipment leasing) and specialized finance pools (e.g., credit cards and nonconforming residential mortgages) are gaining traction with private market investing.
- Challenge: Rising global defaults are testing the resilience of private credit strategies in the alternative investment landscape. Managers must balance risk-adjusted returns with increasing competition from asset managers and insurers entering the space, including private capital funds.
- Infrastructure Funds Gain Momentum
Infrastructure fundraising rebounded in 2024, driven by demand for digital and energy assets such as data centers and renewable energy projects (source).
- Key Drivers in private capital markets: The convergence of digital infrastructure with energy needs is creating new investment opportunities for private market investors. For example, data centers now account for a significant portion of infrastructure portfolios due to their critical role in powering cloud computing and AI applications in public companies.
- Actionable Insight: Investors should focus on assets with high barriers to entry, cash flow visibility, and societal importance to mitigate risks associated with elevated interest rates and improve assets under management.
The Rise of Secondaries as a Key Liquidity Solution and Investment Strategy in Private Markets
With limited IPO activity and traditional deal making still subdued, secondary have become an essential tool for providing liquidity in private market investing. Transaction activity reached new highs in 2024, with GP-led transactions accounting for 40% of deal volume (source).
GP-Led Continuation Funds
General partner (GP)-led continuation vehicles allow fund managers to extend their hold on high-performing private market investments while providing liquidity to LPs seeking exits in private assets.
- Example of private investment: In H1 2024, continuation funds accounted for 86% of GP-led transaction volume—a record high in the private equity asset class. (source).
- Benefit: The benefit of investing in private companies includes enhanced growth opportunities. These structures enable GPs to retain upside potential while addressing LP liquidity needs in private debt investments, enhancing the role of private markets.
LP Stake Sales
Limited partners are increasingly selling stakes in private equity funds through secondary markets to rebalance portfolios or address denominator effects caused by declining public market valuations.
- Trend: The largest real estate secondaries vehicle on record closed in early 2024, signaling strong demand for this strategy in private market transactions. (source).
- Insight: LPs should evaluate secondary sales carefully to avoid leaving value on the table during periods of market dislocation in the capital markets.
The Transformative Opportunity of Technology in Evolving Private Markets
Technology is playing an increasingly critical role in enhancing transparency, efficiency, and decision-making within private markets to secure private wealth.
Enhanced Data Analytics
Advanced analytics tools are helping fund managers make better investment decisions by providing real-time insights into portfolio performance and market trends.
- Example: Predictive analytics platforms are being used to identify high-potential assets across sectors such as renewable energy and healthcare (source).
- Actionable Insight: Fund managers should invest in data-driven tools that enable proactive risk management and value creation in private market assets to enhance performance vs public market.
Blockchain for Transparency
Blockchain technology is being adopted to streamline processes such as capital calls, distributions, and secondary transactions.
- Benefit: By reducing administrative complexity and improving auditability, blockchain can lower costs while enhancing trust between GPs and LPs.
Effective Strategies for Navigating and Succeeding in Private Market
To succeed in this evolving landscape, investors and fund managers must adopt innovative strategies tailored to current market conditions:
- Focus on Value Creation in private market assets: Develop detailed value creation plans during due diligence to ensure post-investment success in the investment fund. This is particularly important for infrastructure assets within the private capital asset class, where operational improvements can drive significant returns.
- Embrace Niche Strategies: Differentiate by specializing in high-growth sectors such as climate tech or digital infrastructure, particularly in venture capital.
- Leverage Secondaries:Leverage Secondaries in private capital markets: Use GP-led continuation funds or LP stake sales strategically to manage liquidity while retaining exposure to high-performing assets under management.
- Invest in Technology: Adopt advanced analytics platforms and blockchain solutions to enhance operational efficiency and decision-making in private real estate investment strategies.
- Prioritize ESG Considerations: Integrate environmental, social, and governance (ESG) factors into investment processes to align with investor priorities in private capital markets and mitigate long-term risks associated with private equity and venture capital.
Private Market Asset Classes vs Public Market are Gaining Traction
Private markets are entering a new era defined by innovation, resilience, and adaptability in private capital investments, reflecting the evolving role of private markets. While challenges such as rising interest rates and constrained liquidity persist, opportunities abound for those willing to invest in private markets and embrace change through innovative private market solutions which can often be more lucrative than public market investments. Whether through expanding into private credit, leveraging secondaries for liquidity solutions, or adopting cutting-edge technology, investments in private markets position investment managers, and their clients for success in this dynamic environment.
As we look ahead to 2025 and beyond, one thing is clear: Private markets will continue to play a pivotal role in shaping global capital flows—and those who adapt their strategies today will be the leaders of tomorrow. This article provides actionable insights tailored specifically for private equity professionals, institutional investors, fund managers, and corporate strategists seeking innovative ways to navigate emerging trends while driving growth in private markets.
