The Future of Private Markets: Innovation, Regulation, and Growth
31 MAR, 2025
Private markets have experienced significant transformation in recent years, driven by increasing institutional investor interest, regulatory developments, and evolving economic conditions. As the lines between public and private capital continue to blur, investors are re-evaluating their strategies to capitalize on emerging opportunities while managing associated risks.
In this article, Tracy Vegro OBE, CEO of the Chartered Institute for Securities & Investment (CISI), explores the key trends shaping private markets in 2025, from the expanding role of pension funds and private credit to the growing emphasis on ESG and liquidity concerns. With a focus on professional investors, this outlook provides insights into the challenges and opportunities that lie ahead in an increasingly complex investment landscape.
Author: Tracy Vegro OBE, CEO of the Chartered Institute for Securities & Investment (CISI)
The world’s major economies face a range of challenges to achieve the goal of sustainable economic growth – geopolitical tensions, fiscal constraints, inflationary pressures and policy uncertainties are apparent across the globe. The US, just one source of the unease, is projected to grow by more than 3% in 2025, slightly below the historical average of 3.7% but still respectable. The UK, meanwhile, faces a combination of sluggish economic growth and rising inflation. Europe is contending with geopolitical tensions, particularly a hostile Russia and an unpredictable US foreign policy.
At the CISI, we have a strong focus on innovation in finance as an engine of growth and, throughout 2025, a particular lens on the private markets landscape. We are working closely with one of the key City of London projects in this field, the Mansion House Compact, whose outcomes will have global impacts, particularly in this private markets world.
The Compact, established in July 2023, is a voluntary commitment by some of the UK’s largest defined contribution (DC) pension providers to allocate at least 5% of their default funds to unlisted equities by 2030. This initiative aims to enhance financial outcomes for DC savers and unlock over £50 billion in capital for high-growth companies. Signatories include major players such as Aegon, Aviva, Legal & General, M&G, Mercer, Nest, Phoenix and Scottish Widows.
The Compact project aims to widen the scope of private market assets to secure additional investment. The private landscape is shaped by a confluence of opportunities and challenges. Key trends influencing investment strategies include the expansion of private debt, the emergence of ‘evergreen’ funds – perpetual investment vehicles that allow continuous capital inflow and periodic redemptions – the integration of environmental, social, and governance (ESG) considerations, and the increasing role of private share trading platforms.
Private debt has made its mark as a significant asset class, with global assets under management heading north of US$1.6 trillion, accounting for a tenth of the US$16.4 trillion alternative investment universe. This growth is driven by companies seeking financing outside traditional public markets, especially as they remain private longer. The scope of private debt is also broadening, encompassing areas like asset-backed finance, which represents a US$5.5 trillion segment in the US alone.
Meanwhile, private equity firms have introduced evergreen funds to appeal to a broader investment base, particularly wealthy retail investors and foundations, by offering semi-liquid investment opportunities.
The regulatory environment for ESG investments is evolving fast, particularly in the US. The current administration’s stance has led to sharp shifts in ESG approaches, affecting investors’ strategies.
This all makes for a complex environment, with increasingly blurred lines across asset classes, products and liquidity profiles. Investors and firms that adeptly manage the dynamics are poised to capitalise on emerging opportunities while mitigating associated risks. Traditional industry classifications are blending and morphing, rendering the industry’s shape less distinct. Private and public markets are converging, making adaptation, innovation and resilience key strategic and tactical issues for achieving success in this new world.
