Private markets are set for a “golden age” even as investors adapt to a world of higher interest rates, thanks to the vast pools of capital controlled by rich families that are set to pour into illiquid assets, says the partner overseeing KKR & Co.’s private equity strategies for wealth.
“The last five years is not going to look like the next five years,” Alisa Wood said Wednesday in a Bloomberg Television interview at the IPEM private equity conference in Cannes. “You need to close that return gap, and I think we are entering what will be the golden age of private markets.”
Industry giants, from KKR to Blackstone Inc., have been targeting the world’s wealthy to fuel the next phase of growth for private equity, credit and alternative assets. It’s an opportunity that’s been turbocharged by expectations that the new Trump administration will unleash a wave of deregulation that will lure more retail investor cash into private markets.
The annual private equity gathering in Cannes is focusing on wealth this year for the first time.
“Individual investors have not had some of the options that institutional investors have had,” Wood said. “If you look at the $190 trillion of wealth in individual hands, less than 1.5% of that has been in private markets. I think that’s the opportunity.”
Still, returns in private markets can vary much more widely than those in stock and bond markets, with the quality of individual managers playing a far greater role, she said.
“The biggest issue in private markets is how do you find the who,” Wood said. “There are thousands and thousands of managers; in the U.S. alone there are more private equity funds and more private market funds than there are McDonald’s.”