The recent growth of private markets has been a phenomenon. Indeed, private funds, which include venture capital, private equity, private debt, infrastructure, commodities and real estate, now dominate financial activity. According to consultants McKinsey, private markets’ assets under management reached $13.1tn in mid-2023 and have grown at close to 20 per cent a year since 2018.
For many years private markets have raised more in equity than public markets, where shrinkage as a result of share buybacks and takeover activity has not been made good by a dwindling volume of new issues. The vibrancy of private markets means that companies can stay private indefinitely, with no worries about gaining access to capital.
One outcome is a significant increase in the proportion of the equity market and the economy that is non-transparent to investors, policymakers and the public. Note that disclosure requirements are largely a matter of contract rather than regulation.