Exploiting the opportunities offered by private marketplaces has grown more cost-effective
In the world of finance, private equity has long been a domain reserved for ultra-high-net-worth individuals and institutional investors. However, the landscape is changing, with innovative fund structures and digital platforms enabling individual investors to access this lucrative investment class with minimum investments as low as £25,000.
One such opportunity is the Franklin Lexington PE Secondaries Fund, a fund that focuses on "secondaries", acquiring private-equity investments from other market participants, usually at a discount. With a minimum investment of £26,000, this fund aims for a yearly return of 12%-15% net of fees over the long term.
Lexington, an expert secondaries manager with a solid record, having been active in this market since its inception over 30 years ago and having $40 billion invested in the asset class, manages this fund.
Another option for those seeking private-equity exposure is the Oaktree Strategic Credit Fund. This fund, managed by Oaktree Capital Management, a global specialist credit investor led by renowned investors Howard Marks and Bruce Karsh, offers exposure to private direct lending and opportunistic credit, two of Oaktree's main areas of expertise. The minimum investment for this fund is £51,000.
The decline in the number of public companies and the increase in privately-owned businesses have also contributed to the growth of private equity. According to recent data, of the 159,000 companies making annual sales of $100 million or more, 140,000 are privately owned. This shift, coupled with the slowing of Initial Public Offerings (IPOs), has made private equity an attractive alternative for investors seeking higher returns.
Indeed, annualized returns on private-equity funds have surpassed those of global listed equity funds by 7.3% a year from 1999-2024. Private-equity funds aim to buy companies, grow them, and sell them at a profit, a strategy that has delivered an average internal rate of return (IRR) of 16.0% since 1990 for secondaries managed by Lexington.
For individual investors, accessing private equity was once a challenge due to high investment minimums (typically millions of dollars) and complex regulatory frameworks. However, the emergence of semi-liquid private equity funds and digital platforms has lowered traditional high minimums to more accessible levels starting at £10,000 to £25,000.
Fund supermarkets/platforms specializing in semi-liquid private equity funds, retail-focused private market funds, and interval funds and secondary marketplaces are some examples of these new vehicles and platforms. These platforms have simplified access for individuals, aggregating funds from respected managers, and offering more flexible liquidity terms than traditional private equity commitments.
For instance, Wealth Club offers access to private market funds from leading managers with minimums from £10,000, enabling investors to participate in private equity that was historically out of reach.
In summary, private equity is no longer a distant dream for individual investors with around £25,000 to invest. By exploring semi-liquid private equity funds and digital platforms like Wealth Club, investors can gain diversified access with reduced minimums and improved liquidity compared to traditional private-equity funds.
Investing in private equity has become accessible for individual investors, as innovative fund structures and digital platforms have reduced minimum investments to as low as £25,000. Another opportunity that enables individuals to access private-equity exposure is investing in the Franklin Lexington PE Secondaries Fund, which focuses on secondaries and aims for a yearly return of 12%-15% net of fees over the long term, requiring a minimum investment of £26,000.
