High net worth individuals (HNWIs) are expected to increase their capital commitments to private equity at a rate which will outpace institutional growth in the asset class, with a CAGR of 19 per cent by 2025.
High net worth individuals (HNWIs) are expected to increase their capital commitments to private equity at a rate which will outpace institutional growth in the asset class, with a CAGR of 19 per cent by 2025.
This is one of the key findings from The Future is Private – Unlocking the Art of Private Equity in Wealth Management, a new report co-authored by Boston Consulting Group (BCG) and iCapital, published today investigating the potential that private equity holds for wealth managers and their clients.
The report also examines the scale of the rapidly growing market opportunity for wealth managers and how they can position themselves to respond and serve their clients’ growing demands in this space.
By 2025, HNWIs will account for more than 10 per cent of all capital raised by private equity funds and the total AUM of individual investors in private equity will be 2.4 times larger than today, rising to USD1.2 trillion.
According to the report, individual investors from the UK held USD5.6 billion in private equity funds as of 2020. In terms of wealth segments, Ultra & Upper HNW accounted for 61 per cent of individual investors’ commitments to private equity, followed by Lower HNW (29 per cent) and Affluent & Retail (10 per cent). The report also argues that capital commitments to private equity funds by affluent individual investors are set to grow at a rate of 13 per cent YoY to reach USD10.3 billion by 2025.
