Understanding private investments

Private investments are not a novel concept. They operate similarly to public investments, where capital is allocated to a specific asset, project, or company, and investors receive returns in the form of income, capital appreciation, or both. The primary distinction lies in the fact that transactions in private markets occur outside the public sphere and are not publicly reported.

Ryan elaborates on this, saying, "Private credit is a useful example. It functions similarly to a bank loan whereby capital is lent to an organisation, interest is paid and returns are generated. Unlike a traditional bank loan, private credit is arranged by non-bank institutional lenders, allowing for more tailored lending arrangements."

These investments can take on various forms, such as private equity, private credit, venture capital, and real assets. Despite their differences, the core principle remains the same: investors back private entities, from local businesses to international pre-IPO companies.

Navigating entry and exit strategies

One of the most common questions among potential investors is how to enter and exit the private market. According to Ryan, private markets are more accessible than ever before. "Private markets are available through private market platforms, private equity fund-of-funds, listed trusts, or co-investments," he notes. A licensed wealth manager can provide various options and guide investors through the process from start to finish.

However, the exit strategy often raises concerns due to the illiquid or semi-illiquid nature of private investments. "Private investments are typically illiquid or semi-illiquid, requiring long-term capital exposure before gains can be fully realised or an asset sold," Ryan explains. Despite this, the growing range of opportunities means portfolios can increasingly be tailored to individual liquidity preferences and investment horizons.

The scope of private investments

Many investors are unaware of the vast scope of private investments. Ryan points out that everyday community businesses make up a significant portion of the investment pool. "Your local coffee shop, your dentist, the family holiday park you return to every summer – all these are all private businesses that could, theoretically, become investments," he says.

With around two-thirds of Australia’s private-sector workforce employed by small and medium-sized private businesses, most people interact with this market daily. These businesses, along with the land they occupy and the real assets they hold, are what private investors are backing.

Assessing the size of the private investment market

The private investment market is extensive, encompassing everything from local community businesses to global enterprises. In 2025, the Australian private credit industry was valued at approximately A$235 billion, accounting for around 12 per cent of business and corporate lending. The McKinsey Global Institute estimates that around US$3.7 trillion a year is needed to fund global infrastructure, a financing gap that private capital is increasingly being called upon to help fill.

Valuing private investments

Determining the value of private investments can be more complex than in public markets. Unlike public markets, where investors can access a live, consolidated portfolio view driven by real-time buyer activity, private portfolios often rely on Net Asset Value (NAV) reports issued quarterly or annually by fund managers and independent third parties. This creates an unavoidable lag and degree of subjectivity in valuations.

Ryan acknowledges this challenge, stating, "This is a system problem, not a private market one." However, he also highlights a forthcoming solution: "With the launch of the FinCap Platform later this month, private portfolios will gain much of the visibility investors are used to in public markets." The managed account platform consolidates data from partnered fund managers and research houses, providing advisers and wholesale investors with a single, near-continuous view of their private holdings.

As private markets continue to grow and evolve, understanding these key aspects can help investors navigate this complex landscape with greater confidence and clarity.