Per Franzén : How The New Rules of Capital Are Changing Private Markets

Private markets must adapt their investment and value-creation models because structural shifts are making historical risk-return frameworks less relevant.

• Global infrastructure needs, productivity investment, technology adoption and retirement savings are increasing demand for private capital, while governments need private funding to supplement public balance sheets.
• The investment environment is becoming more multipolar and interdependent, new innovation-led industries are emerging, and AI could generate a major step-change in productivity.
• EQT argues that private capital’s long-term horizon, flexible governance and hands-on transformation capabilities are suited to this environment, but that past sources of alpha cannot be relied on unchanged.
• The accompanying report is based on input from EQT investment and operating leaders, interviews with more than 30 CIOs, CEOs and partners, and analysis of a global portfolio of more than 300 companies, with external research used to test the conclusions.
• The report focuses on portfolio construction, benchmark dependence, liquidity strategy, manager selection and the capabilities needed to generate returns at scale over the next decade.

Takeaway: Investors should reassess private-markets portfolio design and manager capabilities rather than rely on historical benchmarks and risk-return assumptions, although the article presents the report’s framework more than detailed investment conclusions.