Yesterday we shone a light on two paths private equity is increasingly keen on to grow fundraising efforts—hiring athletes to tap new networks of high net worth individuals and investing in platforms offering alternative assets to wealth managers previously less educated about entry points. The research team at Preqin points to another potential avenue, however, worth exploring as PE business development expands toward retail investors. What is this latest frontier? A Wild West of new products available to retail investors may be on the precipice of opening a new distribution channel for private equity.
“From managers, we’ve seen they’re looking to the retail market as potential area of growth,” says Preqin head of research Dave Lowery, speaking on this morning’s Alternatives in 2022 virtual press briefing. He notes that shifts in regulation about how to package financial products could impact private equity’s market penetration.
“We’ve yet to see what the products look like, that’s down to the regulator,” adds CEO Christoph Knaack. There’s a possibility that regulatory help could aide individuals locked out of the PE market due to high minimum commitments, for instance. “Regulators are looking at how to lower those hurdles in the U.K., and look at the various technology platforms that are starting to reduce barriers to entry…We’ll see what regulators will allow on the product side.”
The upside from more relaxed regulation allowing investors to participate in funds is eagerly anticipated industrywide, from Blackstone’s frequent quarterly refrains about the potential of the high net worth market, to technological platforms like CAIS’ recent $225 million Apollo Global Management-led funding round.
Favorable regulatory winds could well produce a further tailwind for an industry increasingly well positioned to enter a lucrative high net worth market.