The private market investment sector is witnessing remarkable growth, expected to surge from US$13 trillion in 2024 to over US$20 trillion by 2030. This rise is largely attributed to the growing appeal of private credit, which is forecasted to climb from US$1.5 trillion at the start of 2024 to US$2.6 trillion by 2029. Such trends indicate not only the increasing significance of private markets but also their potential to outperform public markets over the mid- to long-term.
Private credit, often viewed as the backbone of this sector, has captivated numerous investors—including some of Australia's largest superannuation funds such as AustralianSuper, Cbus, and Aware Super—who are allocating billions of dollars to this asset class. Investments are driven by the necessity of stable, predictable income and strong protections regardless of prevailing economic conditions. According to GSFM, private credit not only offers attractive opportunities but also stands independent of traditional banking systems, thereby filling gaps left by conventional lenders.
The Australian private credit market, accounting for approximately 2.5% of total business debt, is rapidly catching up to its global counterparts. Recent statistics indicate private credit's expansion has outpaced traditional business debt growth, consistently demonstrating resilience. For smaller companies facing challenges accessing bank financing, private credit serves as both a viable solution and investment opportunity.
Meanwhile, Blackstone Group has significantly bolstered its status as one of the giants of alternative investments, raising $172 billion during 2024 alone. Chairman and CEO, Stephen Schwarzman, highlighted the firm’s 149% increase YoY in fee-related annual performance revenues, underscoring the thriving interest surrounding private markets.
With 30% of the 320 investment advisers surveyed by Hamilton Lane expressing intentions to allocate 20% or more of their assets to private markets, the sentiment for 2025 is overwhelmingly positive. The survey revealed 59% of advisers plan some level of investment, indicating widespread industry recognition of private markets' stabilizing benefits for portfolios.
On the corporate front, SLC Management—part of Sun Life Financial Incorporated—is pivoting its focus toward amplifying profits by 20% over the next three to five years. The Canadian institution, boasting $387 billion AUM across over 1,400 institutional clients, aims to capitalize on its extensive portfolio of alternative asset managers. SLC Management's strategic acquisitions over the past decade now set the stage for coherent branding and expansion, marking the company as more than just another insurance entity.
“We are a top-25 asset management company by AUM... That’s very unique for an insurance company,” observed CEO Kevin Strain during recent comments to investors. By employing integrated business models, SLC aims to amplify the collaborative potential between its various asset managers, enhancing growth and solidifying its position within the alternative investment arena.
Given rising competition and technological advances, regulatory changes are paving the way for retail investors to access private markets. Collaborations, such as SLC's exclusive distribution agreement with Bank of Nova Scotia, aim to make private strategies available to high-net-worth investors, indicating another shift away from traditional investment routes. “There’s a huge trend in terms of retail investors adopting alternatives,” emphasized Steve Peacher, Executive Chair of SLC Management.
The potential for private market investments, particularly private credit, to provide stable, low-volatility returns amid market turbulence sets up opportunities for diverse investor needs. Interest rates, geopolitical pressures, and prevailing economic uncertainty create circumstances ripe for prudent investments.
Sun Life, through SLC, continues asserting itself within the sector, ensuring its products find their way onto investors’ radar. The company possesses ambitions to stake its claim in the retail market through education on how private markets function, including liquidity nuances and associated time horizons.
The overarching narrative of private market growth emphasizes broader trends shaping the investment world. With the forecast of alternative assets held by retail investors expected to swell to $11 trillion from $4 trillion over the next decade, institutions and individuals investing within this space are positioned to reap the benefits of balanced and diversified portfolios moving forward.
With institutional activities, innovative strategies, and shifting market dynamics, 2025 and beyond will likely witness sustained momentum within the private credit and larger private market sectors.