BofA sees retail as key growth avenue for private markets

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BOFA SEES RETAIL AS KEY GROWTH AVENUE FOR PRIVATE MARKETS

From the U.S. to Singapore to the UK, everyday investors are increasingly being offered a slice of the private markets pie - along with a share of the risks - in a massive market increasingly underpinned by AI giants.

Everyone knows private markets are booming. According to a new report from BofA, if this sector were a country, it'd be the world's second largest economy.

They believe the 120 largest unicorns - private companies with an estimated valuation of at least $1 billion - are now worth a combined $3 trillion. OpenAI's latest valuation alone is $500 billion.

"AI companies represent 40% of the top 50 most valuable private companies," says BofA.

Private markets have typically been confined to institutional investors, family offices and the ultra-wealthy who can handle the inbuilt high capital demands and illiquidity. But BofA is flagging a few recent developments that might be changing this narrative.

In August, U.S. President Donald Trump's administration introduced a new order directing regulators to expand access to alternative investments in 401(k) plans.

Over in the UK, BofA highlights May's news that British pension funds pledged to pump up to 50 billion pounds ($66 billion) of additional investment into UK businesses and infrastructure.

They also mention last month's news that British investment platform Hargreaves Lansdown will offer customers access to private market investments via self-invested personal pensions (SIPPs).

According to a press release at the time, Hargreaves Lansdown partnered with Schroders Capital to add two of its private markets Long-Term Asset Funds (LTAFs) to the platform.

Back in March, the Monetary Authority of Singapore (MAS) proposed a Long-Term Investment Fund (LIF) Framework to allow retail investors access to private market investments.

"Retail AUM is one of the key growth avenues for private markets in the next decade," says BofA.

(Lucy Raitano)