KKR’s Head of Client Services, Eric Mogelof, has warned that an influx of retirement money into private markets could push asset managers to calculate portfolio values with unprecedented frequency. Private equity assets, traditionally reserved for institutional investors, are usually locked up with valuations determined monthly or quarterly.
“Assigning a price each day, which could be necessary for the more frequent transactions those investors want to do, is the bigger challenge,” Mogelof said on the Capital Allocators podcast. The demand for disclosure and more frequent valuations is likely to intensify as firms like KKR, supported by U.S. policy initiatives, work to channel a portion of the roughly $12 trillion in 401(k) retirement plans into alternative assets, including private equity, real estate, and cryptocurrency.
Current valuation methods rely on comparisons with other companies or discounted cash flow metrics, a process known as marking, which may need adjustment to meet daily pricing requirements. Mogelof noted that large-scale participation from 401(k) savers will take time but is inevitable. “There’s no doubt in my mind, in a decade from now, we will see very meaningful allocations within that DC market to private markets,” he said.
The shift toward more frequent pricing and enhanced transparency is particularly relevant for CFOs, as it impacts portfolio management, liquidity planning, and financial reporting for firms investing in private markets. CFO’s and Asset managers may need to rethink systems and processes to meet evolving investor expectations.
