Private markets

Unlike public markets, where stocks and bonds are traded daily on organized financial exchanges, private markets rely on transactions conducted directly between investors and companies or through specialized funds.

Private equity, private debt, infrastructure, and unlisted real estate are now the main components of the private markets.

What is the difference between private contracts and public contracts?

The distinction is based primarily on the nature of the assets and how they are traded.

Public Procurement

Investors buy or sell securities listed on organized markets.

Prices are constantly changing based on supply and demand.

Private markets

Investments are made in unlisted assets.

Trades are less frequent, and assets are generally held for longer periods.

This difference affects, in particular, liquidity, valuation, and the investment horizon.

What types of assets are found in private markets?

Private markets encompass a variety of investment strategies.

Private Equity

Investing in privately held companies to support their establishment, growth, or transition.

Private debt

Business financing in the form of loans provided outside the traditional banking system.

Infrastructure

Financing or acquiring assets such as energy networks, transportation, telecommunications, or social infrastructure.

Unlisted real estate

Investment in real estate assets held outside of listed financial markets.

These various strategies share a common feature: they are based on assets that are generally illiquid and held for the long term.

Why are private markets growing?

Several factors account for their growth over the past few decades.

Companies are staying private longer

Many companies continue to grow for several years before considering a potential initial public offering.

Funding needs are increasing

Companies are looking for sources of capital to supplement traditional bank financing.

Investors are diversifying their portfolios

Private markets offer exposure to assets and value drivers that differ from those of public markets.

The development of the real economy

Private markets provide a means of directly financing businesses, projects, and infrastructure that contribute to economic activity.

What is the role of private equity in the private markets?

Private equity is one of the most significant components of the private markets.

The funds invest in private companies at various stages of development:

Venture Capital

Financing for startups and innovative companies.

Growth Equity

Support for fast-growing companies.

buyout

Acquisition and development of established companies.

Private equity is thus a major pillar of the private markets sector.

What are the benefits of private markets?

Access to unlisted companies

Investors can participate in the growth of companies that are generally not listed on stock exchanges.

Diversification

Private markets offer exposure to assets with characteristics that differ from those of listed stocks and bonds.

Horizon

Investments are generally designed to support the growth and transformation of the assets they finance.

What are the risks associated with private markets?

Risk of capital loss

As with any investment, private markets carry the risk of partial or total loss of the capital invested.

Liquidity risk

Assets held cannot generally be resold quickly.

Valuation risk

The lack of continuously observable market prices requires the use of specific valuation methods.

Economic risk

Performance depends on how companies perform, the projects they fund, and their economic environment.

Private markets and institutional investors

Historically, private markets were primarily accessible to institutional investors such as:

• Pension funds;
• Insurance companies;
• Sovereign wealth funds;
• Foundations;
• Family offices.

In recent years, access to certain private market strategies has gradually expanded to a wider range of investors thanks to developments in investment vehicles and regulations.

Private markets and value creation

Value creation in private markets generally relies on:

Business Development

Revenue growth, innovation, or international expansion.

Operational improvement

Process optimization and organizational performance improvement.

Long-term investments

Financing of assets whose value creation spans several years.

This approach distinguishes private markets from an approach focused solely on daily fluctuations in financial markets.

History of Private Markets

The 1980s: The Rise of Modern Private Equity

The first major institutional funds are investing heavily in private companies.

1990s–2000s: Diversification of Strategies

Private debt, infrastructure, and private real estate are experiencing strong growth.

Today

Private markets represent several trillion euros in assets under management and are playing an increasingly significant role in the portfolios of institutional and high-net-worth investors.

FAQ

What are private markets?

Private markets encompass investments made outside of public stock markets, including investments in unlisted companies, private debt, infrastructure, and unlisted real estate.

What is the difference between private markets and public markets?

Public markets allow securities to be traded on the stock exchange, while private markets involve unlisted assets that are traded directly between investors.

Is private equity part of the private markets?

Yes. Private equity is one of the main investment categories in the private markets.

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Disclaimer: Investing involves the risk of capital loss. Past performance is not indicative of future results. The information presented in this article is intended solely for educational and informational purposes. It does not constitute investment advice or a recommendation to buy or sell any financial instrument.