UK private markets fund managers target HNW investors

UK private markets fund managers are targeting high net worth (HNW) investors in anticipation of strong inflows from individual investors, Wealth Club has found.

Its study of fund managers across the private equity, private credit, real estate and infrastructure sectors showed that 49 per cent were already targeting retail and HNW investors through semi-liquid or evergreen funds.

A further 50 per cent were planning to target individual investors, with 42 per cent intending to launch funds within the next year and 40 per cent planning to launch in one to three years.

Just 1 per cent of the private markets fund managers surveyed did not plan to target HNW and retail investors.

Private markets managers estimated, on average, that 14 per cent of their inflows would come from HNW and retail investors within five years.

Currently, managers estimate that, on average, 9.5 per cent of inflows come from individual investors.

This increased demand is expected to increase the range of private market opportunities available to HNW investors.

Almost six in 10 (59 per cent) private markets fund managers anticipated minimum investments for their semi-liquid funds to be below £50,000, including 20 per cent who expected minimums between £10,000 and £20,000.

However more than one in 10 (11 per cent) said minimum investments will be more than £250,000.

All private market fund sectors were expecting to benefit from this expansion, with infrastructure (81 per cent) leading the sector, ahead of private credit (78 per cent) and private equity (77 per cent).

"Private market fund managers are making it clear that sophisticated and HNW investors will become an increasingly important source of capital over the next five years,” said Wealth Club founder and CEO, Alex Davies.

“More managers are launching semi-liquid funds, inflows from this market are expected to grow strongly and minimum investment levels are continuing to fall.

"For most individual investors, private markets have historically been largely out of reach. While investment trusts and other specialist vehicles have provided some access, many of the world's leading private equity, private credit and infrastructure managers were simply unavailable, while traditional private market funds often required very large minimum commitments and complex capital call structures.”

Davies argued that semi-liquid funds were changing this by opening up access to a much broader range of managers and strategies and removing many of the practical barriers that have held investors back in the past.

“They also remove the discount and premium volatility associated with listed investment trusts, allowing investors to focus on the performance of the underlying assets,” Davies continued.

"The direction of travel is clear. Fund managers increasingly recognise the sophisticated investor market as strategically important and are launching products designed to meet that demand. We believe that will significantly broaden access to private markets over the coming years."

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