• The following explains how private markets access is increasingly in demand and the extent to which private assets are expected to grow in the future.
• This information is aimed at asset managers seeking to deepen their involvement in a market area with strong growth potential, to develop more comprehensive strategies.
• FlexFunds offers an asset securitization program to improve the liquidity of private market assets. For more information, please feel free to contact our experts.

Public markets remain extremely popular and financially profitable in the United States. However, access to private markets is growing and becoming increasingly in demand, and it is expected to continue in the future. Fortunately, assets in this segment will not necessarily face illiquidity issues.

The Growing Demand for Exposure to Private Markets

2024 was a year of contrasts for the private markets. At first glance, private equity (PE) appeared to be facing another challenging period as fundraising fell 24% year-over-year, marking three consecutive years of decline. At the same time, returns showed modest performance compared with the vigor of public markets.

However, a deeper analysis reveals signs of recovery and strategic adaptation that reaffirm the sector’s role in global portfolio management.

Recovery in Wholesale Distributions

One of the most notable milestones was the rebound in distributions to institutional investors (LPs). For the first time since 2015, distributions exceeded capital contributions, reaching the third-highest level in history.

In a recent survey, LPs valued the distributions to paid-in capital (DPI) metric 2.5 times more than they did three years ago. At the same time, large-scale transactions exceeding USD 500 million became more prominent, signaling a renewed interest in major deals.

Improving financial conditions played a key role in expanding access to private markets. Although financing costs remain above the ten-year average, in 2024 they fell enough to encourage private equity-backed loan issuance, with volumes nearly doubling.

Entry multiples also rebounded after the 2023 decline, reflecting increased confidence among managers in the macroeconomic environment.

The contrast with the recent past is clear. Between 2022 and 2023, sharp interest rate hikes and geopolitical uncertainty significantly impacted the industry. As a result, deal activity slowed, and valuing assets purchased at inflated pandemic-era prices became more challenging.

Expansion Projections

However, the sector has shown resilience. In fact, 30% of surveyed investors plan to increase their exposure to private equity (PE) over the next 12 months, supported by the historical performance of this asset class, which has consistently outperformed the S&P 500 since the early 2000s.

The private market is growing not only in size but also in diversity. Today, there are more than 17,200 private companies in the United States with annual revenues exceeding USD 100 million, compared to fewer than 4,100 publicly listed companies.

Moreover, the average age of companies at IPO has increased from 6 years in 1980 to 10.7 years in 2024, extending the period of value creation in the private sphere.

This trend has opened opportunities for sophisticated investors, such as family offices and high-net-worth individuals, who gain access to private markets through co-investments or secondary transactions, benefiting from greater transparency and lower fees.

In this context, demand for retail access is also gaining momentum. According to Adams Street Partners, individual investors already account for nearly USD 2.7 trillion and could represent 37% of the total within the next five years.

Looking ahead, over 90% of financial advisors believe private markets will outperform public markets in the long run, with 60% expecting their clients’ allocations to increase over the next three years.

In short, despite challenges such as complexity, the need for financial literacy, and macroeconomic risks, the trend is clear. Private markets have moved beyond being an exclusive institutional niche and are now a strategic part of diversified, future-oriented portfolios.

Interval Funds: Enhancing Liquidity in Private Investments

Although private investments show clear signs of growth, they still face the challenge of illiquidity.

Unlike assets traded on public markets, private market assets cannot be bought and sold in minutes or seconds, at a low cost.

Being private holdings, as the name suggests, they must be exchanged through large contracts and bureaucratic processes, and only if there are willing buyers and sellers to complete the transaction.

Fortunately, there is an alternative that improves liquidity: interval funds.

As detailed by the U.S. Securities and Exchange Commission (SEC), an interval fund is an investment company that allows its shareholders to periodically sell a portion of their holdings back to the fund.

These repurchases occur on a scheduled basis under pre-established conditions, although shareholders are not obligated to accept the offer or relinquish their shares.

Although they are closed-end funds, interval funds differ from conventional closed-end funds in two ways:

1. The fund itself conducts periodic repurchases at a price determined by the net asset value (NAV).
2. Many interval funds are also authorized to continuously issue new shares, again at the fund’s NAV.

Repurchase offers are typically made every three, six, or twelve months, as specified in the fund’s prospectus and annual report. Shareholders are notified in advance of the relevant dates, including the deadline to accept the offer.

How Does Asset Securitization Also Enhance Liquidity in Private Markets?

Asset managers should also be aware of another way to enhance liquidity and improve access to private markets: asset securitization.

Through this process, carried out by companies like FlexFunds, a basket of assets, liquid or illiquid (such as private market assets), is transformed into a listed exchange-traded product (ETP).

This ETP is a bankable asset with its own ISIN/CUSIP code, allowing it to be traded through a conventional brokerage account worldwide.

For more information about FlexFunds and our asset securitization process, you can contact our team of experts. We’ll be happy to assist you!

Sources:

• https://www.adamsstreetpartners.com/news/2025-advisor-outlook-highlights-rising-demand-for-access-to-private-markets/
• https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report
• https://www.morganstanley.com/articles/invest-in-private-companies
• https://www.investor.gov/introduction-investing/investing-basics/glossary/interval-fund