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Two decades ago, the remit of private markets was largely restricted to financing early-stage venture capital at one end of the spectrum and shaking up bloated and out of touch listed corporates at the other. Credit was either provided by banks, or public securities.

That situation has now changed entirely. The private credit industry has skyrocketed and, per industry estimates, the number of US businesses backed by private markets is now more than double the number of public companies, as traditional IPO candidates choose to stay private for longer.

And yet the private markets ecosystem relies on a fully functioning and vibrant public market. The biggest managers, with the biggest funds, in particular, need access to the broadly syndicated loan market, and the ability to exit to public markets investors.

In the latest edition of our Private Markets 2030 series, we examine how the interplay between private and public markets is likely to evolve over the next five years, and what can be done to revitalise the IPO exit route, as well as alternative options for generating liquidity and oiling the wheels of the ever-growing private markets machine.

Staying private for longer

“There are over 20,000 private companies with $100 million or more in revenues in the US today. If you look at the public market, there are just 4,500 companies with that revenue,” says Lawrence Calcano, chairman and chief executive of alternatives-focused fintech company iCapital. “Furthermore, if you really dissect the public markets, the overwhelming amount of capital is flowing into just a handful of stocks. The concentration is huge.

“Unsurprisingly, therefore, advisers want their clients to have access to the swathes of the economy that now exist outside the public markets, which means more and more dollars are pouring into private markets, and to some extent that supports the continuing trend towards staying private.”

Historically, companies have chosen to go public in order to solve one or more issues. “They were either trying to raise capital to grow, or trying to generate liquidity for shareholders, or trying to gain greater brand recognition by becoming a public company,” Calcano says. “Today, you can do all those things very effectively in the private markets, and without many of the challenges and expense of being a listed company.”

There are those that believe the tide is starting to turn, however. Simon Olsen, a partner in Deloitte’s equity capital markets group, says much of the reason for companies staying private for longer in the years running up to 2021 was ultra-low interest rates, which made private funding easy to come by – and inexpensive.

“More recently, IPO markets have been poor as a result of macroeconomic and geopolitical events”

Simon Olsen,
Deloitte

“More recently, IPO markets have been poor as a result of macroeconomic and geopolitical events,” Olsen says. “It started with war in Ukraine in 2022, and was followed by the cost of living crisis and then the outbreak of events in the Middle East. In addition, a substantial part of the world held elections in 2024, notably the US. Then in 2025, you had ‘Liberation Day’, which caused a lot of uncertainty in capital markets through April and May, which are traditionally the busiest months for IPOs.

“In the absence of any further macro shocks, I think we will start to see companies coming back to the public markets at an earlier stage in their lifecycle, now that interest rates have returned to more normalised levels.”

Magnus Tornling, global head of equity capital markets at EQT, also expects to see steady, but not explosive, growth in IPOs from private markets funds over the next five years. The biggest change, according to Tornling, is that sponsors are now focusing more on aftermarket performance, rather than maximising the price of the IPO, which should in turn help keep IPO markets healthy.

“If the IPO trades well and continues to meet and exceed quarterly estimates, it is possible to create repeatable monetisation platforms, which also then serves to keep IPO windows open,” Tornling says. “That is a change from 10 years ago, when the focus was more on maximising the price of the IPO, or the next sell down, which didn’t always result in investors making money. The Swedish Stock Exchange has been the poster child for this this year, with several highly successful IPOs and great local ownership.”

“Just because companies stay private for longer, doesn’t mean they won’t ever go public”

Lawrence Calcano,
iCapital

Meanwhile, the very fact that companies have been staying private for longer could also prove to be positive for public markets. “Just because companies stay private for longer, doesn’t mean they won’t ever go public,” says Calcano. “At some point, capital structures can become more complex, or other issues may come into play that make companies want to list. They just aren’t rushing into it and, in many respects, that is good for public markets.”

Calcano recalls market dynamics during the dotcom bubble that began in the mid-1990s, “when you had companies like Pets.com going public with virtually no revenues”.

“Investors were making up the metrics they used to evaluate companies as they went along. That’s not a great public market environment either,” he says. “When companies eventually do go public now, they will be larger and more mature, so I actually think companies waiting longer to list could be a good thing.”

Molly Breen Dirscherl, a managing director, global head of equity capital markets and Americas head of capital markets at Permira, agrees that the size profile of companies going public is changing. But she adds that this also creates challenges that need to be overcome.

“A lot of the IPOs that took place in 2010 through to 2020 involved smaller companies with more growth ahead of them,” she says. “When you look at the companies that are sitting in sponsors’ IPO backlog today, however, many have been in portfolios for a long time. They are larger and offer less perceived upside to the market in the longer term.”

The challenge here, Breen Dirscherl says, is that you need to educate the market on this profile of business and why it is still attractive. “At Permira, we have professionalised our in-house ECM capabilities to focus on bridging this gap, helping investors understand why these scaled, resilient businesses remain compelling investments. If managed well, these are still highly cash-generative businesses. They are stable, long-term compounders, that deserve a place in the portfolios of large public equity investors.”

“With the IPO market having been less liquid for an elongated period of time, private markets have had to get creative”

Tim Morris,
DC Advisory

What is it, then, that public markets investors are going to be looking for in an IPO candidate over the next five years? Breen Dirscherl spends a lot of time talking to public equity investors, trying to understand what is going to draw them to IPOs given the current market.

“What we hear is that businesses with a strong moat – clear market leaders with a relative market share that is two to three times ahead of the next competitor – are going to be in demand. Meanwhile, in situations where the winner is not as obvious, a bigger discount will probably be required as investors look to the market to determine who that winner will be over time.”

Developments in artificial intelligence are also playing into the IPO pipeline. “We anticipate many things related to AI are going to feature heavily in IPOs over the next few years, whether that means companies that are integrating AI heavily in their business or companies at the picks-and-shovels end of the AI spectrum, as well as semiconductor companies,” says Luke Riela, a principal and private markets research consultant at Meketa Investment Group. “Another area where we might see more activity is in the crypto space, although narratives can alter very quickly in the public markets, so things could certainly change by 2030.”

IPO alternatives

Private markets are nothing if not creative, of course. In the years in which the IPO window has remained resolutely shut, the industry has developed new ways of generating liquidity for investors, and innovation is likely to continue.

Tim Morris, UK CEO at DC Advisory, points to a renewed appetite for peer partnerships. “What we have seen in recent years when IPO markets have been challenged is a willingness from private equity firms to work together.” This includes the likes of minority stake sales, he says, as well as instances where sponsors bring in other private markets partners to provide a business with liquidity but where none of the investors have a controlling stake.

“With the IPO market having been less liquid for an elongated period of time, private markets have had to get creative, and this has opened firms’ eyes to the opportunities that exist, both in terms of fund-to-fund deals and the rise of the secondaries market,” Morris adds. “Continuation vehicles are now approaching 20 percent of all exits for private equity. Something that began as a necessity is now shifting to being by design.”

There are also structural innovations emerging that are designed to facilitate the trading of shares in the private realm. In the UK, for example, PISCES – or the Private Intermittent Securities and Capital Exchange System – is intended to provide a solution that can work for private companies at different stages of their growth journey, allowing access to liquidity for early-stage investors and direct access to opportunities for investors looking to buy shares in the next generation of high-growth private companies. It will do so by enabling companies to take advantage of the London Stock Exchange’s public markets infrastructure, while remaining private.

Tornling sees PISCES as a constructive and positive initiative that broadens the axis and improves transparency in private markets. “I don’t think it will change the IPO calculus in the short term, however. I see it as more of a complementary product than a competing product to the IPO market.”

But Breen Dirscherl thinks there is a need for a middle ground. “We need a way to create liquidity in the private markets for names that don’t necessarily belong in the public markets,” she says. “There is so much capital available in the private markets that investors are looking to put to work. The challenge for the industry is to find a way to channel that capital efficiently into scaled private businesses for which the only path, historically, has been to go public.”

Indeed, Breen Dirscherl believes we may even see the emergence of a new asset class within the next five years, akin to the transformation that has taken place in private credit, which morphed from merchant banking into an industry that is on par with the broadly syndicated loan market in just over a decade. “We don’t expect a private IPO solution to rival the public markets at scale, but we do think there is a place for a structure that works across multiple names. Right now, the only solutions in play are highly bespoke and manual. But with all this dry powder sitting here, there is definitely room for innovation.”

Public markets reform

Regardless of any initiatives being taken to replicate public market infrastructure in the private markets space, there is no doubt that public markets themselves are still essential.

“Having a functioning IPO market is important for the entire economy. It provides funding for early-stage companies in the biotech sector, for example,” says Tornling. “Furthermore, if less and less of the economy is in the public domain, it becomes harder for the general public and pension funds to take part in value creation activity.”

Fully functioning and vibrant public markets are also important from a competitive standpoint, says Tornling. “It is essential that Europe, for example, has IPO markets that work. When companies go to the US to get funding, it is natural that more and more of their decision-making moves to the market where they are listed. Europe needs functioning public markets in order to remain competitive on a global stage.”

“We need a way to create liquidity in the private markets for names that don’t necessarily belong in the public markets”

Molly Breen Dirscherl,
Permira

“Private equity serves a purpose,” says Breen Dirscherl. “Sponsors can come in, make improvements, help get the governance right, accelerate growth and position businesses to generate long-term value. But then there is a right time for passing those assets into the public markets for their next leg of growth or stage in their lifecycle.”

What can be done, then, to reinvigorate public markets and to restore some balance with private markets?

There has been a widespread capital markets reform agenda as public markets have tried to make themselves more attractive to potential issuers. “The UK, for example, has seen extensive reforms over the past three years and the same thing is now happening in the EU,” says Deloitte’s Olsen. “There also appears to be a desire in the US to deregulate, thereby making the markets more attractive. It is important that capital markets are attractive and accessible to issuers.”

Indeed, US President Donald Trump recently renewed his call for US listed companies to report earnings on a half-yearly basis, rather than quarterly, in order to allow management teams to save money and focus on running their companies properly, according to his social media platform Truth Social.

“The current administration’s discussions around potentially moving to semi-annual reporting would certainly reduce the costs of going public,” says Calcano. “Anything that reduces the difference between the cost structures and time allocations involved in being a public company versus a private company would be a good thing.”