The Next Generation of Private Capital: How Allocation Is Being Re-Underwritten

Private markets investing is the practice of investing in companies and assets that are not traded on public stock exchanges. Capital is committed to private businesses, funds or real assets, usually for multi-year horizons, and returns are realised through eventual sale, refinancing or income rather than daily market quotation. Investors typically gain access in one of two ways: by committing to a managed fund run by a specialist manager, or by investing directly, including alongside a manager as a co-investor. Because these holdings are illiquid and harder to value, access has historically been limited to institutional and accredited investors rather than the general public.

That single paragraph is the whole of the definition. The substance sits in what gets bought.

The clearest way to understand private markets investing is by contrast with public markets, where shares and bonds trade continuously on an open exchange. Four differences matter most.

Start with liquidity. Public holdings can usually be sold on any trading day; private holdings cannot. Capital is locked up for years, and that illiquidity is the defining trade-off of the asset class. In principle, investors expect to be compensated for accepting it, the so-called illiquidity premium, the additional return sought in exchange for giving up the ability to exit at will. That premium is an expectation, not a guarantee, and it varies by strategy and vintage.

Then there is access. Public markets are open to almost anyone; private markets have historically been gated to institutional and accredited investors, on the reasoning that illiquid, less-transparent holdings suit investors able to lock up capital and absorb the analysis. Time horizon is the third: private strategies are measured in years and full cycles, not quarters, which changes how performance should be judged. The fourth is valuation and transparency: public prices are continuous and visible, while private valuations are periodic and depend on the manager's marks, so transparency is lower and comparison harder.

None of this makes one structure better than the other. Public and private markets answer different questions. The point of the comparison is to be clear-eyed about the trade-off: private markets ask investors to give up liquidity and continuous pricing, and the case for accepting that has to be made on the merits, position by position, rather than asserted.

A clean definition explains what private markets investing is. It does not explain why allocation is changing now. The first force is generational: capital is changing hands, and the people receiving it allocate differently from the people who built it.

The driver is the great wealth transfer, the multi-decade movement of accumulated wealth from the baby-boomer generation to spouses, heirs and chosen causes. Cerulli Associates projects roughly $84 trillion transferring in the United States through 2045 on its earlier estimate, rising to roughly $124 trillion through 2048 on its updated 2024 projection (Cerulli Associates, 2024). These are United States figures and long-range projections, not a settled global total, a distinction the headline coverage routinely flattens. In the United Kingdom, the Group's lead market alongside the United States, the comparable range is roughly £5.5 trillion to £7 trillion by around 2050 (Kings Court Trust / Cebr, cited by Brooks Macdonald; Vanguard UK, 2024).

However the totals are eventually counted, the behavioural shift underneath them is not in doubt. Bank of America research finds that 72% of younger investors, aged 21 to 43, no longer believe it is possible to achieve above-average returns using only traditional stocks and bonds, against just 28% of investors aged 44 and over who feel the same way (Bank of America Private Bank, Study of Wealthy Americans, 2024). That 72%-versus-28% figure is a split in sentiment by age, not a measure of who holds the wealth, and it is the spine of the change in behaviour. A generation that does not believe the traditional balanced portfolio can deliver will reach for alternatives and private markets as a matter of conviction.

Three behaviours separate the receiving generation from the one that built the wealth. They start from a higher baseline allocation to private markets, treating private equity and private credit as core holdings rather than satellite positions. They are more willing to hold uncorrelated and frontier exposures, from real assets to digital assets, where an older portfolio might have stopped at listed equities and bonds. And they expect the selection process itself to be evidenced and technology-led, favouring managers who can show how a decision was reached rather than assert a track record. The claim here is qualitative and observable in allocation surveys, not a promise of specific returns: the receiving generation tilts toward private markets, and that tilt turns a transfer of ownership into a re-allocation of capital.

That same generation increasingly receives and deploys capital through a formal structure: the family office. For readers new to the term, the Group explains what is a family office and how these vehicles work, and examines why the single family office population is rising. The fuller case for the receiving generation as a distinct class of allocator runs through the Group's work on next-generation allocators. The handover, read from the buy-side, is a re-allocation event before it is an inheritance one.

Generational change is the first force. Four more sit alongside it, and together they are what the Group means by allocation being re-underwritten rather than merely growing. Each is the subject of a dedicated analysis; each points the same way.

Understanding the forces is one thing; acting on them is another. In practice, allocators reach private markets through two broad routes, and the choice between them is where a firm's character shows.

The first route is funds: committing capital to a specialist manager who sources, underwrites and operates the underlying investments. The second is direct and co-investment: investing into companies or assets directly, often alongside a manager, which offers more control and concentration but demands far more in-house capability. Both routes still run through the institutional and accredited gates described earlier; private markets remain, for now, the province of professional investors rather than the general public.

This is where the family-office-partnership lens differs from the platform one. A platform sells access to a catalogue. A partnership of family offices reads private markets as a principal: it brings proprietary, off-market dealflow that a distribution channel rarely sees, and it underwrites every position on one discipline across divisions. For most allocators, the practical entry points are understanding the vehicle, how the family-office model works and why single-family-office formation is accelerating, and then engaging through the Group's investments activity and its partnership network. The route matters less than the underwriting behind it.

A house view is only as credible as its discipline with numbers, so it is worth being explicit about what is known and what is merely projected. On the direction of travel, the evidence is strong: capital is moving to a younger generation, the investable set is widening, and tokenisation and AI are changing the infrastructure of access. On the size of each shift, the honest answer is a range.

Take tokenisation. Credible projections for the tokenised real-world-asset market in 2030 span roughly $2 trillion at the conservative end (McKinsey, 2024 base case) to roughly $16 trillion at the upper end (BCG / ADDX, 2022); both ends are projections. That is not a rounding difference: it reflects genuinely different assumptions about scope, adoption and which asset classes move on-chain. The wealth-transfer figures carry the same caution: $84 trillion to $124 trillion in the United States through the late 2040s (Cerulli Associates, 2024), each end a projection on different definitions and dates.

There is a further discipline that the headline numbers tend to obscure. The CFA Institute has argued that the wealth transfer is more concentrated, and in places more modest, than the largest figures imply, because a disproportionate share sits with a small band of high- and ultra-high-net-worth households (CFA Institute, 2024). A cumulative figure stated through 2048 also describes more than two decades of gradual settlement, not a sum arriving at once. Both points cut the same way: a large, real shift is best read as a trajectory, not a windfall.

The Group's rule is to state both ends, name them as forecasts, and never anchor a thesis on the largest number available. Anyone presenting a single dramatic figure as settled fact is reporting a projection as though it were a measurement.

Read soberly, private markets investing is no longer a question of whether. It is a question of how allocation is being re-underwritten: by a generational handover of capital, by the tokenisation of real-world assets, by AI moving into underwriting, by a widening set of alternatives, and by a new class of allocator that treats private markets as core. Those five forces point the same way, and the magnitude of each is best stated as a sourced range rather than a headline.

That is the synthesis IMS Group, a technology-forward private markets investment group and partnership of family offices, exists to narrate and to act on. Readers can go deeper through the five Insights analyses: the institutional adoption of digital assets, real-world-asset tokenisation, the role of AI in underwriting, the expanding set of alternative assets and the rise of a new generation of allocators. To see how the thesis informs the Group's work, explore its private-markets investment activity and its partnership network of family offices.