Are Private Markets Reaching the Final Frontier?
Traditional asset managers, the ones picking stocks and bonds, are usually viewed as rivals to private markets. But increasingly the two sides are acting as partners rather than competitors.
Just last week, KKR and Capital Group announced an expanded partnership aimed at, in their words, “redefining what’s possible for investors through best-in-class strategies that combine the strengths of both public and private markets.” The firms have already teamed up on two funds that combine public and private credit, with a public/private equity fund set to launch in the new year. Last week's announcement extends their partnership into defined contribution pensions, model portfolios, and the insurance industry.
Then on Monday, Invesco and LGT Capital Partners announced a partnership to develop "a suite of multi-alternative private markets solutions" aimed at the U.S. wealth and retirement markets.
That raises an interesting question: could these partnerships help private market giants finally reach the one investor segment that has remained out of reach, individuals with smaller portfolios or higher liquidity needs? Because it’s not just these four firms making this bet; many others are following the same playbook:
A Match Made in Heaven?
There’s a natural symbiosis emerging between traditional asset managers and private market firms. Traditional managers bring extensive distribution networks, allowing them to reach advisors and investors that alternative managers often can’t access on their own. At the same time, many incumbents are rethinking what active management means in a world increasingly shaped by alternatives. Apollo’s Marc Rowan may have put it best:
In the past, many traditional asset managers tried to close the gap through acquisitions. BlackRock, for example, acquired Global Infrastructure Partners and private credit specialist HPS, while Franklin Templeton pursued a string of deals, most notably the purchase of secondaries firm Lexington Partners in 2022.
But as Franklin CEO Jenny Johnson told the Financial Times in September, those kinds of acquisitions have become far less feasible due to widening valuation gaps between traditional and alternative managers. As a result, partnerships are increasingly the only practical path for traditional asset managers seeking exposure to private markets.
Not that Easy
In Canada, the closest attempt at this model has been Mackenzie’s partnership with Northleaf on the Mackenzie Northleaf Private Credit Interval Fund, launched in early 2022. Mackenzie is owned by IGM Financial, which also holds a majority stake in Northleaf, making this very much an in‑house experiment.
