Key Takeaways
- Private market investments are holdings in assets that do not trade on an exchange: private equity, venture capital, private credit, real estate and infrastructure.
- Preqin data puts global private markets assets above $15.3 trillion in 2024, and around 84% of US companies with revenues above $100 million are private.
- Growth assets (private equity, venture) and income assets (private credit, infrastructure) play different roles and should be sized separately.
- The trade-offs are illiquidity, valuation lag, higher fees and wide dispersion between managers, so selection and governance decide outcomes.
- Allocations should match genuine time horizons and be judged on risk-adjusted returns, net of fees, against a fair public benchmark.
Most of the economy never appears on a stock exchange. Of roughly 730,000 operating companies in the United States, only about 4,000 are publicly listed, according to Morgan Stanley. The rest are owned, financed and built privately, by founders, families, funds and lenders. Private market investments are how investors gain exposure to that much larger world.
What began as a niche for university endowments and pension funds is now a core allocation for institutions and, increasingly, for private wealth. Preqin data cited by Opimas puts global private markets assets above $15.3 trillion in 2024, and Morgan Stanley Research expects the total to reach around $26 trillion by 2029. Growth has slowed from its peak, and 2026 reminded investors that liquidity in private markets comes with conditions attached.
This guide explains what private market investments are, the main types, how they differ from public markets, why investors use them, and what to weigh before committing capital.
What are private market investments?
Private market investments are holdings in assets that do not trade on a public exchange. They include equity and debt in privately held companies, directly owned property and infrastructure, and the funds and vehicles that hold them. Prices are negotiated between buyer and seller rather than set by continuous trading, valuations are produced periodically, and access is largely restricted to professional and qualified investors.
The line between public and private describes how ownership changes hands, and says nothing on its own about the quality of the business. Many companies cross it. A listed business can be taken private by a buyout fund; a venture-backed company can float. The same loan can sit on a bank's balance sheet or with a private lender. What changes is how the investor gets in, what information they receive, and how easily they can get out.
The main types of private market investments
Private markets are usually grouped into five asset classes, each with its own return engine.
Private equity
The largest and most established segment. Private equity funds buy controlling or minority stakes in companies, work to improve them, and exit through a sale or listing. Strategies include buyouts, growth equity and turnarounds. Buyouts use significant leverage, which amplifies outcomes in both directions, and results depend heavily on entry price, exit conditions and the quality of the general partner.
Venture capital
Equity in early-stage companies with high growth potential. Returns are highly concentrated: a small number of winners typically make up most of a fund's gains, while many investments return little or nothing.
Private credit
Lending outside the traditional banking system. Strategies range from senior secured direct lending to mezzanine, distressed debt and asset-based lending secured on receivables, equipment or loan books. Tighter bank regulation since 2008 has pushed much of this lending to non-bank providers. Returns come mainly from contractual interest, which makes private credit the most predictable part of the private markets universe. Our guide to private credit covers the asset class in depth.
Real estate
Private real estate funds invest in residential, commercial, industrial and logistics property. Returns come from rent, development and capital growth, with strategies ranging from lower-risk core holdings to opportunistic development.
Infrastructure
Essential assets such as transport, energy, water and digital networks. Cashflows are long-dated, often regulated or contracted, and frequently linked to inflation, which gives infrastructure a defensive role in a portfolio.
Hedge funds are sometimes grouped with private markets because they are privately offered and restricted to qualified investors. Most hold liquid securities and offer monthly or quarterly dealing, so they are better treated as a separate category of alternative investment.
| Asset class | What the investor owns | Main source of return | Typical holding period |
|---|---|---|---|
| Private equity | Stakes in private companies | Growth, operational change, exit value | Fund lives of around 10 years |
| Venture capital | Minority stakes in early-stage firms | A few large winners | 10 years or more |
| Private credit | Loans to companies and lenders | Contractual interest and fees | Typically 2–6 years per loan |
| Real estate | Property, directly or via funds | Rent and capital growth | 5–10 years |
| Infrastructure | Essential physical assets | Long-dated, often inflation-linked cashflows | 10 years or more |
Private vs public markets: the key differences
The practical differences show up in pricing, information and the investor's ability to leave.
| Feature | Public markets | Private markets |
|---|---|---|
| Pricing | Continuous, set by trading | Negotiated; valued quarterly or less often |
| Liquidity | Sell in seconds | Locked up for years; limited secondary market |
| Information | Standardised public disclosure | Negotiated access, often more detailed |
| Who can invest | Anyone | Mainly professional and qualified investors |
| Minimum investment | One share or unit | Often $100,000 or more per fund |
| Investor's role | Usually passive | Often active: terms, covenants, governance |
| Costs | Low for index funds | Higher management and performance fees |
Two points sit behind the table. First, private investors often receive better information than public shareholders, because they negotiate for it: a private lender can require monthly loan tapes and covenant reporting that no listed bondholder would see. Second, the price of that access is the inability to exit at will.
Why investors allocate to private markets
Higher expected returns
Investors who lock up capital expect to be paid for it. The illiquidity premium is the extra return earned over a comparable liquid asset, and it is joined by premia for complexity and origination work. Dispersion between managers is wide: top-quartile private equity funds have materially outperformed public equities, while bottom-quartile funds often lag them.
Access to a larger opportunity set
According to Morgan Stanley, around 84% of US companies with revenues above $100 million are private. Investors who stay in listed markets miss most of the economy, including many fast-growing businesses that now stay private for longer.
Contractual and inflation-linked income
Private credit pays interest set out in the loan agreement, usually on a floating rate. Infrastructure and real estate offer income linked to rents, tariffs or inflation indices. Both suit investors who need predictable cashflow.
Diversification and influence
Private assets respond to different drivers than listed markets, and investors can shape the outcome through governance rights, covenants and security. Reported diversification benefits need care, because quarterly valuations smooth out volatility. We explain how to adjust for that in risk-adjusted returns in private markets.
The risks to understand
- Illiquidity: capital is committed for years, and early exits usually mean a discount, if a buyer can be found. In March 2026, redemption requests at several large evergreen private credit funds exceeded their quarterly limits, including a record 7.9% at Blackstone's BCRED, a live reminder that liquidity terms matter.
- Valuation uncertainty: model-based valuations can lag reality and understate volatility.
- Fees: management fees, performance fees and transaction costs can absorb a large share of the gross return.
- Manager dispersion: the gap between good and poor managers is far wider than in public markets, which makes selection and due diligence decisive.
- Leverage and structure: borrowing at fund or company level magnifies losses, and where an investor sits in the capital stack decides who absorbs them first.
- Governance and operational risk: private markets are less regulated than public ones, so the quality of controls, reporting and alignment rests on the manager. Our piece on governance in private credit sets out what to look for.
How investors access private markets
There are several routes, each with different trade-offs between control, liquidity and cost.
- Closed-end funds: the traditional model. Investors commit capital, the manager draws it down over several years, and proceeds are returned as investments are realised.
- Evergreen and semi-liquid funds: open-ended vehicles offering periodic subscriptions and redemptions, usually capped. US semi-liquid funds held $457 billion at the end of 2025, according to Morgan Stanley Investment Management.
- Direct and co-investments: investing alongside a manager in a single company or transaction, with lower fees and more concentration.
- Notes and securitised structures: listed or cleared securities, such as credit linked notes, that give investors exposure to a defined pool of private loans through a regulated vehicle.
What this means for investors
Private markets are now too large to ignore and too varied to treat as a single allocation. Private equity and venture capital are growth assets; private credit and infrastructure are mostly income assets. They fill different roles, and the right mix depends on what the portfolio needs to do. Our article on the 50/30/20 portfolio looks at how allocators are making room for them.
The discipline is the same across all of them. Size the allocation to genuine time horizons, so that nothing has to be sold at the wrong moment. Choose managers on process, governance and alignment, given the dispersion in outcomes. Compare returns on a risk-adjusted basis, net of fees, against a fair public benchmark.
At Kingsbury & Partners we work at the credit end of this spectrum, providing senior secured facilities to specialty and non-bank lenders and holding them to maturity. That is one part of private markets. The wider point applies to every asset class: the return that matters is the one an investor keeps after fees, losses and the cost of waiting.
Frequently Asked Questions
What are examples of private market investments?
Private equity buyouts, venture capital, private credit such as direct lending and asset-based finance, privately held real estate, and infrastructure such as energy, transport and digital networks.
What is the difference between private equity and private credit?
Private equity buys ownership stakes and earns returns from growth and exit value. Private credit lends money and earns contractual interest, ranking ahead of equity if the borrower runs into trouble.
Are private markets riskier than public markets?
They carry different risks: illiquidity, valuation lag, higher fees and wider manager dispersion. Senior secured private credit can be less volatile than listed equities, while venture capital is among the riskiest asset classes available.
How long is money locked up in private markets?
Closed-end funds typically run for 7 to 12 years. Individual private loans often run 2 to 6 years, and semi-liquid funds offer periodic redemptions subject to limits.
Can individual investors invest in private markets?
Access is mainly for professional, qualified or high-net-worth investors, with rules varying by jurisdiction. Semi-liquid funds and listed notes have widened access, though minimums and eligibility checks still apply.
Why are private markets growing?
Companies are staying private for longer, banks have stepped back from many types of lending, and investors are seeking returns and income that public markets alone do not offer.
