After two decades dominated by institutional investors, private markets are entering a new phase of development. Private wealth management is taking on an increasingly central role.
For private banks, multi-family offices and independent asset managers, the stakes are high. Private markets offer not only the potential to diversify and enhance long-term returns for client portfolios, but also an opportunity to develop sustainable sources of income. However, building a credible private market offering remains complex. Investment structures, operational processes and reporting systems have historically been designed for institutional investors. Transposing them to wealth management often creates friction.
This is precisely the challenge that ROYC addresses by offering an operational infrastructure dedicated to private markets, combining investment structuring, allocation solutions and digital infrastructure. We spoke to Mathias Leijon, founder and chairman of ROYC, and Lucas Stalder, Director - Client Solutions, to understand how the private markets ecosystem is evolving and what wealth management institutions need to develop their offering.
Private equity activity has slowed in Europe. Is this a temporary pause or a more structural phenomenon?
Leijon: It's more of a recovery than a collapse. For more than a decade, capital was extremely cheap. With the rise in interest rates, transactions are taking longer and exits are more difficult, which is slowing down activity. But the fundamentals of private equity remain solid over the long term.
Private equity investors think differently to institutional investors. What does this mean in concrete terms?
Stalder: Institutional investors are familiar with the mechanisms of private markets: vintages, capital calls, diversification between managers and investment programmes structured over several years.
Private investors have a more results-oriented approach: building long-term assets, generating income and diversifying their portfolios. They also expect a similar experience to the rest of wealth management: simple onboarding, clear reporting and accessible investment amounts. Adapting private markets to this reality therefore requires changes to investment structures and operational infrastructure.
Demand for evergreen and semi-liquid structures is growing. Why is this?
Stalder: These structures better reflect the way in which private investors deploy their capital. Traditional private equity funds involve long commitments and irregular capital calls. Evergreen structures allow investors to build up their exposure gradually, invest more flexibly and reinvest distributions over time.
Which strategies are currently attracting the most interest from private investors?
Leijon: Mid-market buyouts, secondary strategies and infrastructure are particularly relevant. Infrastructure provides access to long-term assets linked to the real economy and often offers protection against inflation. Secondary strategies allow investors to invest in mature portfolios and generally offer greater visibility over distribution flows. Together, these strategies help to build a balanced allocation between value creation potential and stable cash flows.
Many banks and asset management companies want to develop their private market offering. What is currently holding them back?
Stalder: Client demand is clearly there. The main challenge is mainly operational, but also relates to the way in which these solutions are marketed and advised. In practice, there are four recurring obstacles.
The first is access: the minimum investment requirements are often too high for private clients. The second concerns operations. Underwriting processes, capital calls and administrative follow-up are still largely manual in many organisations. The third challenge is portfolio construction. Customers need coherent programmes, not just a collection of funds.
Finally, reporting: investors don't want to have to connect to several portals to track their investments.
How is ROYC responding to these challenges?
Stalder: ROYC acts as an infrastructure partner for wealth management institutions. Our aim is to enable them to deploy and manage private market investment programmes in an efficient and scalable way. Our approach is based on two main elements.
The first is structuring. We create investment vehicles tailored to private clients, in particular regulated feeder funds, funds of funds or evergreen structures that aggregate the allocations of several investors in order to reach institutional size.
The second is the operational infrastructure. Our Operating System digitises the entire investment lifecycle: investor onboarding, KYC, subscriptions, capital calls, distributions and reporting.
This approach enables banks, asset managers and family offices to launch and develop a private market offering without having to build their own operational infrastructure.
The next growth driver for private markets
Leijon: For banks, asset managers and family offices, the opportunity is considerable. On the other hand, private markets will not be able to grow in wealth management with manual processes and fragmented systems. Institutions that build the right infrastructure will have a significant competitive advantage. By combining structuring, access to investments and digital operations, ROYC enables its partners to expand their private market offering while retaining control of the client relationship.