Consolidation in private markets is reshaping the industry, potentially altering the landscape of expected investment returns for investors. There have been several significant acquisitions of private asset managers recently, and discussions of potential others to follow. In most cases, large alternative asset managers and traditional asset managers have been the acquirers resulting in the “big getting bigger.” Notable transactions include Blackrock’s announced acquisition of Global Infrastructure Partners, TPG’s acquisition of credit and real estate manager Angelo Gordon, and Ares’ rumored attempt to acquire real assets manager GLP Capital. These transactions come at about the same time that, in 2023, Blackstone became the first alternative asset manager to surpass $1 trillion in total assets and Brookfield followed this year.
M&A in the alternatives space allows firms to expand their product offerings and geographic reach while also building fundraising scale for institutional markets, insurance, and private wealth. These large firms have been leaders in attracting capital from individual investors and their share of that market will likely grow as the benefits of scale give them greater access to the private wealth channel and greater operating economies.
This trend could ultimately lead to a difference in expected returns between institutional and individual investors. Institutions will continue to have access to mid-sized and emerging managers who might be able to generate outsized returns by quickly moving into niche markets and opportunities, and who can create products tailored to the specific needs of institutions. Individual investors may only be offered products geared toward the masses that are highly diversified and more risk-averse. If there is a divergence in returns that favors large institutions, high-net-worth investors will need to re-evaluate the trade-off between illiquidity and the benefits of diversification and any excess returns that they may receive by investing in private assets.
Steve was formerly the Chief Investment Officer and Head of Private Markets at Manulife Investment Management. In this role, he was responsible for leading global investment teams across a wide range of asset classes, including private equity and credit, real estate, infrastructure, timber, and agriculture. Steve has served as a director of many public and private companies during his career, including two of Manulife’s U.S. SEC-registered investment advisors.
Important Notice: Private Markets Navigator does not provide investment advice, and the information should not be construed as such. Investing in private asset funds is risky, with potential for total loss and long-term liquidity restrictions. Read our full dislaimer.