Private-equity investments by individual investors are set to drive significant growth in the sector, with assets under management expected to reach nearly $12 trillion by 2029, according to a report by Preqin. While institutional investors, such as banks and pension funds, have long dominated private equity, their contributions are now leveling off. In response, private-equity firms are targeting family offices, wealth managers, and individual investors with new investment vehicles offering lower minimums and greater liquidity.
The influx of individual investors is motivated by the double-digit returns that private-equity funds can offer, with less volatility compared to public markets. Moreover, the number of private companies continues to grow as more firms forgo initial public offerings (IPOs). As a result, private-equity assets are expected to outpace public markets in the coming years. Preqin anticipates a surge in fundraising after 2027, with global totals rising to $660 billion annually. However, rising interest rates could pressure returns, with buyout strategy funds expected to see reduced internal rates of return (IRR) from 13.9% to 11.7% by 2029.
