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Demystifying private capital funds

As private capital continues to attract a larger investor base, fund managers must consider which fund structures are most suitable and popular.

In an economic climate characterized by high-interest rates and low growth, alternative assets offer investors stable, long-term returns and a secure place to invest their capital. While activity in the private equity space may be slowing, private credit and real estate investment remain robust. As the economy moves into the next cycle, distressed funds are expected to thrive.

However, alternative assets can be complex, and managers entering these areas or expanding their portfolios must be aware of tax, regulatory, and legal requirements, as well as investor demands and compliance obligations.

Given these considerations, what fund structures are managers utilizing to meet their evolving needs, and which options are most appropriate as private capital targets a wider investor base?

These were the key questions addressed in our recent #PrivateFundsIndustryLIVE event: Demystifying Private Capital Funds.

The retailisation of private capital

During the discussion, one of the main topics was the ongoing trend of retail investors entering the private capital market and the most suitable structures for targeting this investor base.

Bkp Capital highlighted the situation in the United States, where the rising popularity of business development companies (BDCs) is evidence of the retailisation trend. BDCs function as a gateway for non-institutional investors to access credit and distressed investing opportunities, she explained.

According to Bkp Capital , much of the focus in the US is on addressing tax issues associated with direct lending. BDCs' status as regulated investment companies (RICs) makes them an attractive option, and their relative transparency provides reassurance to retail investors.

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