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August 4, 2025Private Markets: Private Credit, Private Equity & Alternatives.
23 July 2025
1. Introduction
Private markets—encompassing private equity, private credit, real estate, infrastructure, and alternative strategies—have become a cornerstone of institutional portfolios. In 2025, this theme has surpassed traditional public strategies in attention and allocation. According to McKinsey, private market dealmaking may have slowed in 2024, but capital deployment expanded, and over 30 % of leading limited partners (LPs) plan to increase private equity allocation this year . Meanwhile, private credit AUM has surged, now exceeding US $1.6 trillion, and nearly half of LPs plan to boost allocations in the next 12 months . The pivot reflects longterm confidence in private markets’ ability to deliver outperformance, enhanced governance, resilience, and diversification—particularly as public markets grapple with higher interest rates, volatility, and geopolitical uncertainty.
2. Investment Rationale
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Diversification & Illiquidity Premium
Private markets offer exposure to less efficient, informationlight asset classes where skilled managers can earn returns beyond public benchmarks. Adams Street Partners reports that 85 % of LPs expect private markets to outperform public markets, citing lower volatility and superior governance.
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Elevated Yield & Return Potential
Private credit, in particular, has attracted significant interest. With limited bank lending and rising rates, middlemarket direct lending has become a major growth area. Wellington notes the private credit market now addresses a > US $30 trillion opportunity, spanning venturegrowth loans to CLOs.
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Maturing Ecosystem & Investment Innovation
Private markets are evolving—from traditional closedend structures to evergreen or interval funds that offer builtin liquidity, catering to new investor profiles . Secondary markets have strengthened: Coller Capital highlights that 37 % of LPs plan to increase secondaries exposure, reflecting demand for liquidity and flexibility.
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Macro Backdrop & Resilience
The rebound in distributions—public market outflows have begun reversing—is reinforcing confidence. For the first time since 2015, distributions exceeded contributions among LPs . Additionally, private credit’s fixedrate structures offer a hedge in a “higher for longer” rate environment, enabling lenders to capture steady income.
3. Investment and Trade Ideas
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Private Credit & Direct Lending
Institutions can access private credit through middlemarket direct lending funds (https://stewardsinvestment.com/stewards-private-credit-fund/) or private credit ETFs and interval funds. Benefits include floating or fixed rates, robust covenant packages, and downside protection. Sectors like healthcare, tech, and AIinfrastructure have seen targeted deals.
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Private Equity – Vintage & Sector Focus
Allocations are shifting from mega funds toward midmarket and sectorspecialist vehicles, which often provide more attractive entry valuations. Coinvestment structures offer lower fees, and geography plays a role—North America and Europe remain favored over Asia.
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Secondaries & GPLed Continuation Funds
Secondary markets remain robust: Coller Capital projects continued growth, with GPled continuation vehicles providing liquidity and extended hold periods . These instruments allow LPs to optimize cash flows without selling at discounts.
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Evergreen / Interval Structures
Liquidity-enhanced vehicles such as interval funds and evergreen structures are gaining traction. These formats combine the advantages of illiquidity premia with periodic liquidity windows, offering more flexible access to private returns.
4. Conclusion and Risks
Institutions increasingly see private markets as essential for delivering yield, diversification, and long-term outperformance. With AUM growing and access broadening, the sector now speaks as loudly as public alternatives. BlackRock’s target of $400 billion private capital by 2030 underscores this shift.
However, risks must be carefully managed:
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Valuation opacity: Private assets lack real-time prices, leading to mispricing and liquidity risk. This is where one should focus on funds providing regular, monthly to quarterly pricing.
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Interest-rate sensitivity: While private credit benefits from higher yields, stressed credits could emerge in weaker sectors.
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Liquidity mismatch: Most private assets lock capital for 5–10 years which is why Stewards focussed on bringing shorter lock-ups between 1 and 2 years.
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Market cycle concerns: Some analysts warn private markets may be maturing into latecycle excess, with potential overvaluation. This can be alleviated by investing in shorter duration assets such as Merchant Cash Advance funds.
Final Thoughts
To institutional investors, private markets no longer represent an exotic tilt, they are a foundational plank in modern portfolios. By integrating private credit, private equity, secondaries, and innovative fund structures, investors pursue enhanced income, better governance, and asymmetric longterm returns and better risk-adjusted performance. Success depends on prudent manager selection, clear liquidity frameworks, and vigilant risk controls.
by Ashfaaq Aboobaker
Head of Investment at Stewards Investment Capital
About Stewards Investment Capital
Stewards Investment Capital is a boutique investment advisory firm with a track record of over 25 years under the Stewards Group of Financial Companies. Strategically positioned in Mauritius, South Africa, and the USA, we tailor niche investment solutions to high-net-worth individuals and institutional investors.
Guided by a high-alpha approach and fuelled by a passion to be a catalyst for growth, our commitment to our investors is rooted in our mission to grow and nurture their wealth, building lasting fortunes and creating enduring legacies to achieve real freedom. This endeavour is powered by our team of passionate investment professionals, each contributing decades of experience and expertise to our firm.
For further information about Stewards Investment Capital, please visit stewardsinvestment.com/
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Suneeta Motala
Chief Marketing Officer
Forbes Communication Council Member
Email: suneetamotala@stewards.global, thestewards@stewards.global
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