PRIVATE MARKETS INTELLIGENCE
Private Markets
Private markets encompass the investment strategies that operate outside publicly traded exchanges — and they have become the defining allocation question for family offices and institutional investors in 2026.
What Are Private Markets?
Private markets is the collective term for investment strategies that operate outside publicly traded stock and bond markets. The primary asset classes within private markets are private equity, private credit, infrastructure, real assets and venture capital.
Private markets investments are characterised by several shared features. They are illiquid — capital is typically committed for periods of five to ten years or longer. They are less transparent than public markets — information is not publicly disclosed in the way that listed company information is. They require a minimum commitment that puts them beyond the reach of most retail investors. And they have historically delivered returns in excess of public market equivalents over long time horizons — though this premium is not guaranteed and varies significantly between managers.
For family offices — which typically have long investment horizons, no obligation to meet redemption demands and the capacity to commit capital for extended periods — private markets are a natural fit. The illiquidity that makes private markets unsuitable for many investors is, for a family office, simply a structural feature of the asset class rather than a constraint.
Private Equity
Private equity involves the investment of capital into private companies — either through buyouts of established businesses or through growth capital investment in expanding companies.
Private equity fund managers raise capital from institutional and sophisticated investors, deploy it into a portfolio of companies over a three to five year investment period, actively manage the portfolio companies to improve their performance and profitability, and then sell the companies — through a trade sale, secondary sale or public listing — within a total fund life of typically ten to twelve years.
Family offices participate in private equity through fund investments — committing capital to a private equity fund managed by a professional manager — through co-investments alongside funds in specific deals, and increasingly through direct investments in which the family office acquires a stake in a company without the intermediation of a fund manager.
Private Credit
Private credit encompasses lending activity that takes place outside the banking system and outside public bond markets. It includes direct lending to mid-market companies, mezzanine financing, distressed debt investing, asset-backed lending and infrastructure debt.
The growth of private credit as an asset class has accelerated significantly since the global financial crisis of 2008, as regulatory changes reduced the appetite and capacity of banks to lend to mid-market companies. Private credit managers stepped into this space and the asset class has grown substantially.
For family offices, private credit offers floating rate returns — which provide some protection in rising interest rate environments — and a yield premium over public credit in exchange for illiquidity. Drawdown risk, manager selection and credit quality assessment are the primary risk management considerations.
Infrastructure
Infrastructure investing encompasses investment in the physical assets and systems that underpin economic activity — transport networks, energy generation and transmission, water and utilities, digital infrastructure and social infrastructure such as hospitals and schools.
Infrastructure assets are characterised by long asset lives, predictable cash flows, significant barriers to entry and in many cases some degree of inflation linkage. These characteristics make infrastructure attractive to long-duration investors including family offices and pension funds.
The infrastructure investment universe has expanded significantly in recent years. Energy transition assets — solar, wind, battery storage — have become a major component of infrastructure portfolios alongside traditional regulated assets.
Real Assets
Real assets encompasses physical assets with intrinsic value — real estate, infrastructure, natural capital and commodities. Real estate remains the most widely held real asset in family office portfolios. Natural capital — forestry, agriculture, biodiversity credits — is a rapidly growing allocation category as families seek both financial returns and environmental impact.
Real assets provide diversification from financial assets, potential inflation protection and in many cases income returns alongside capital appreciation. Illiquidity is the primary constraint — real assets cannot typically be sold quickly without accepting a significant discount to intrinsic value.
Direct Investing
Direct investing refers to family office investment directly into operating companies or assets without the intermediation of a fund manager. It is distinct from co-investing — which involves investing alongside a fund manager in a specific deal — though the two are often discussed together.
Direct investing offers family offices several potential advantages: no management fees, no carried interest, greater control over investment decisions and the ability to take a genuinely long-term ownership perspective unconstrained by a fund's exit timeline.
The principal challenge of direct investing is the capability required to originate deals, conduct due diligence, negotiate terms and actively manage investments without the support of a professional fund management team. Family offices that invest directly successfully have typically built dedicated internal investment teams.
Private Markets Outlook for 2026
The private markets landscape in 2026 is characterised by several structural shifts. Fundraising conditions have become more selective after a period of significant capital deployment. Manager selection has never been more consequential — the performance gap between top and bottom quartile managers in private markets is significantly larger than in public markets.
Secondaries — the purchase of existing private market interests from investors seeking liquidity — have become a mainstream strategy as investors rebalance portfolios and manage the denominator effect.
The democratisation of private markets access — through evergreen structures, semi-liquid vehicles and technology platforms — is expanding the investor base for private markets assets, with implications for both future returns and the competitive landscape for deal origination.
Frequently Asked Questions
Q: What is the minimum investment for private markets?
A: Minimum commitments vary significantly by strategy and manager. Traditional closed-end private equity funds typically require minimum commitments of £1 million or more from institutional investors. Newer semi-liquid and evergreen structures have lower minimums. Co-investments and direct investments vary by deal.
Q: How illiquid are private markets investments?
A: Traditional closed-end funds have fund lives of ten to twelve years with limited liquidity during the investment period. Co-investments and direct investments are similarly illiquid unless a secondary sale can be arranged. Evergreen and semi-liquid structures offer periodic liquidity windows but with constraints.
Q: What returns have private markets historically delivered?
A: Private markets have historically delivered a return premium over public market equivalents over long time horizons. The premium varies significantly by strategy, vintage year and manager quality. Past performance is not a reliable indicator of future results.
Q: What is the J-curve in private equity?
A: The J-curve refers to the typical return profile of a private equity fund over its life. In the early years management fees are drawn and investments are made at cost — producing negative or flat returns. As portfolio companies mature and are realised, returns typically increase significantly. The J-curve effect means private equity returns appear weak in early years and improve as the fund matures.
Q: What is carried interest?
A: Carried interest is the share of investment profits paid to a private markets fund manager as performance compensation. Typically twenty percent of profits above a hurdle rate. It is the primary performance incentive for fund managers and aligns manager and investor interests.
Q: What is a MOIC?
A: Multiple on invested capital — a measure of absolute return in private markets investing. A MOIC of 2x means an investment returned twice the capital invested. Used alongside IRR as a primary performance metric in private markets.
Q: What is an IRR?
A: Internal rate of return — the annualised return of an investment taking into account the timing of capital flows. The primary performance metric used to evaluate private markets fund managers.
Q: What is a vintage year?
A: The year in which a private markets fund begins investing. Vintage year is an important performance context because economic conditions at the time of investment significantly affect outcomes. Funds with the same strategy can produce very different results depending on their vintage year.
Q: What is a private markets secondary?
A: The purchase of an existing investor's interest in a private markets fund. Secondaries provide liquidity to the seller and allow the buyer to acquire interests in mature funds — reducing the J-curve effect and providing earlier cash flows than primary fund investing.
Q: What is a co-investment?
A: An investment made alongside a fund manager in a specific deal. Co-investments typically carry reduced or no fees and carried interest, making them an attractive complement to fund investing for family offices with the capability to evaluate individual transactions.
Q: What is an evergreen fund?
A: A private markets fund structure with no fixed end date that accepts capital on an ongoing basis and provides periodic liquidity windows. Evergreen structures have lower barriers to entry than traditional closed-end funds and reduce the J-curve effect.
Q: What due diligence is required for private markets investing?
A: Manager due diligence — evaluating the team, track record, strategy and operational infrastructure of a fund manager. Investment due diligence — evaluating specific deals in the case of co-investment or direct investment. Legal and tax due diligence on fund documents and structures. Operational due diligence on the fund administrator, auditor and custodian.
Q: How do family offices build a private markets portfolio?
A: Typically through a combination of fund commitments — providing diversified exposure across managers and strategies — and co-investments or direct investments that allow the family office to deploy additional capital into its highest-conviction opportunities. Building a diversified private markets portfolio takes time given the closed-end nature of most funds.
Q: What is the denominator effect?
A: When public market valuations fall, the proportion of a portfolio represented by illiquid private markets investments increases — even if their valuations have not yet been marked down. This can cause investors to appear over-allocated to private markets relative to their targets. The denominator effect has driven secondary market activity as investors seek to rebalance portfolios.
Q: Where can I find out more about private markets investing?
A: UK Private Wealth Magazine publishes regular editorial on private markets strategies, manager selection and allocation trends. The UK Family Office Summit Oxford provides a closed-door forum for family office principals to discuss private markets allocation with peers.