Private markets: Building what’s next

Brookfield's thought-leadership piece, "Private markets: Building what's next," argues that large, long-lived assets such as housing, highways, ports and hydropower form the backbone of the global economy, and that this backbone is being reshaped by digitalization, deglobalization and decarbonization. The article says energy networks need overhauling as geopolitical tensions, decarbonization, AI adoption and urbanization raise power demand. It cites $106 trillion needed to modernize infrastructure through 2040 and $7 trillion to build AI infrastructure.

The article describes a shift in who finances and owns this infrastructure. Two decades ago, governments owned most infrastructure and energy systems and banks provided most long-term lending. Today, governments face limited budgets, and stricter regulation has led banks to retreat from long-dated and complex lending. Brookfield argues that this creates a need for long-term owners with operating expertise, and that private equity, private credit, real estate and infrastructure are now established markets central to the next phase of growth.

On the investment case, Brookfield cites several points. Private assets are built to operate for decades and can produce steady income. The firm says private assets tied to long-term contracts or regulated revenue tend to be less volatile. It also argues that stock-bond correlations have risen in recent years, reducing the diversification bonds previously offered. Brookfield says infrastructure and real estate contracts often allow pricing to rise with inflation, and that private credit frequently uses floating-rate structures. Brookfield's analysis of more than 20 years of data suggests alternatives may offer attractive returns with less risk, though the article does not provide specific return figures in the text.

The article argues the current period is an attractive time to invest, citing lower valuations after years of rising rates and slowing deal activity. It says private equity vintages launched during periods of uncertainty and low valuations have historically produced outsized returns. Brookfield notes that underwriting should be more conservative than in the ultra-low-rate period and that discipline and manager selection remain critical. The article quotes Brookfield CEO Connor Teskey, who said capital is moving to real assets for stable cash flows and inflation protection, and Brookfield CEO Bruce Flatt, who said real assets become essential in the current environment. It also quotes Howard Marks, co-founder of Oaktree and chair of Brookfield Investment Solutions Group. Finally, the piece notes that institutional investors such as pension plans and insurers have steadily increased private allocations, and cites a 2025 McKinsey survey in which leading institutional investors said they would allocate more capital to private markets over the coming year.