Key Takeaways
- • Global private capital AUM projected to nearly double to $18.3 trillion by 2027, according to Preqin research cited by S64's CEO, signaling sustained long-term growth despite near-term headwinds in the alternatives sector.
- • Rising interest rates have created significant headwinds for alternative asset classes, particularly private equity, credit, and property, reversing the favorable low-yield environment that drove investor inflows in recent years.
- • Private credit and infrastructure emerge as primary opportunities within alternatives, offering stable yields and inflation hedge characteristics that appeal to institutional investors navigating elevated rate environments.
- • S64, spun out from Deutsche Bank's alternatives division, positions itself as a technology-enabled solutions provider offering lifecycle management of alternative assets from structuring and onboarding through secondary market capability across Europe and Asia.
- • Private equity retains value as a diversifier in volatile markets, despite the challenging outlook, maintaining relevance for institutional allocators seeking portfolio volatility reduction.
Summary
Tarun Nagpal, CEO and founder of London-based global alternatives solutions provider S64, outlined a nuanced outlook for the alternatives and private markets industry in a December 2023 interview, acknowledging both near-term headwinds and persistent long-term opportunities.
The alternatives sector faces material near-term pressure from rising interest rates, which have reversed the favorable conditions that drove substantial investor inflows into private equity, credit, and property during the extended low-yield environment. However, Nagpal emphasized that private equity retains its fundamental value proposition as a portfolio diversifier in volatile markets, preserving its appeal despite the more challenging outlook.
Within the alternatives landscape, Nagpal identified private credit and infrastructure as particularly attractive segments for institutional investors. Both asset classes offer stable yield generation and function as inflation hedges—characteristics that carry heightened relevance in a higher-rate environment. This assessment aligns with research from Preqin, which projects that global private capital assets under management will nearly double to $18.3 trillion by 2027, suggesting sustained secular growth despite current cyclical headwinds.
S64 itself reflects the structural evolution of the alternatives industry. Spun out from Deutsche Bank when the bank consolidated its alternatives offering, the firm operates as a technology-enabled solutions provider serving asset managers and private banks across private equity, credit, infrastructure, and impact strategies. The platform delivers lifecycle management capabilities spanning asset structuring, onboarding, financing, and secondary market functionality, positioning it to service growing demand from wealth managers and private banks in Europe and Asia as the alternatives sector matures and professionalization deepens.
The alternatives sector faces material near-term pressure from rising interest rates, which have reversed the favorable conditions that drove substantial investor inflows into private equity, credit, and property during the extended low-yield environment. However, Nagpal emphasized that private equity retains its fundamental value proposition as a portfolio diversifier in volatile markets, preserving its appeal despite the more challenging outlook.
Within the alternatives landscape, Nagpal identified private credit and infrastructure as particularly attractive segments for institutional investors. Both asset classes offer stable yield generation and function as inflation hedges—characteristics that carry heightened relevance in a higher-rate environment. This assessment aligns with research from Preqin, which projects that global private capital assets under management will nearly double to $18.3 trillion by 2027, suggesting sustained secular growth despite current cyclical headwinds.
S64 itself reflects the structural evolution of the alternatives industry. Spun out from Deutsche Bank when the bank consolidated its alternatives offering, the firm operates as a technology-enabled solutions provider serving asset managers and private banks across private equity, credit, infrastructure, and impact strategies. The platform delivers lifecycle management capabilities spanning asset structuring, onboarding, financing, and secondary market functionality, positioning it to service growing demand from wealth managers and private banks in Europe and Asia as the alternatives sector matures and professionalization deepens.
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