Private markets are investments that are not traded on a public exchange. They include private equity, private credit, unlisted property and infrastructure, and investments in private companies before they list. Interest in private markets has grown, but so has the importance of understanding how they differ from listed investments.

What counts as a private market investment?

Private market investments come in several broad forms:

  • Private equity — ownership stakes in companies that are not listed.
  • Venture and growth capital — investment in earlier-stage businesses.
  • Pre-IPO investments — capital raisings ahead of a proposed listing.
  • Private credit — loans made to businesses or projects outside the banking system.
  • Unlisted property and infrastructure — real assets held through unlisted funds or trusts.

How private markets differ from public markets

Disclosure. Listed companies are subject to continuous disclosure obligations. Private companies generally are not, so investors may have access to less information and it may be harder to verify.

Valuation. Listed investments have a market price every trading day. Private investments are typically valued periodically, often using models or recent transaction prices. These valuations can lag market conditions and may not reflect the price a buyer would actually pay.

Liquidity. Private investments are generally harder to sell. Investors may need to hold them for years, and exit may depend on an event such as a sale of the company or a listing.

Access. Many private market opportunities are available only to wholesale or sophisticated investors, and minimum investment amounts can be significant.

Why investors consider private markets

Some investors consider private markets to access businesses and assets that are not available on public exchanges, to broaden diversification, or to pursue potential returns linked to the growth of private companies. Private credit may be considered by investors seeking income, although it carries credit and liquidity risks.

These potential benefits come with trade-offs. The same features that make private markets different — less disclosure, less liquidity and less frequent valuation — are also sources of risk.

Due diligence matters more

Because information is less standardised, due diligence plays a larger role in private markets. Investors commonly look at the quality of the business or assets, the experience of the managers, the terms of the investment, fees, reporting arrangements and exit pathways. Understanding what happens if things do not go to plan is as important as understanding the potential upside.

A measured allocation

Private market investments are generally considered as a portion of a broader portfolio, sized with regard to the investor's liquidity needs and tolerance for uncertainty. This article is general information only and does not constitute financial advice.