Following SpaceX’s June 2026 IPO, Ross Butler asks Mark Boggett, CEO and General Partner of Seraphim Space, what investors should make of the much wider SpaceTech ecosystem.
The conversation explores why defence is underwriting near-term growth, how AI is unlocking satellite data, why falling launch costs could make orbital infrastructure viable, and where investable opportunities may sit beyond launch and connectivity.
Included in this episode:
Where the investment opportunities sit beyond SpaceX, Starlink and launch
Why war is accelerating revenues across dual-use SpaceTech companies
How AI and lower launch costs could unlock data, energy and orbital infrastructure
How Seraphim invests from accelerator stage through to listed growth capital
The big take
Space is becoming a digital and physical infrastructure layer for the global economy. Defence budgets are accelerating deployment and helping companies move more quickly through their technology roadmaps, but the long-term investment case depends on those capabilities becoming commercially useful at scale.
The key question is not simply whether space creates economic value. It is where that value ultimately accrues: to launch providers, vertically integrated satellite operators, sovereign infrastructure suppliers, data platforms, communications networks or in-orbit service companies.
Mark estimates that SpaceX addresses only around 20% of the broader opportunity, leaving substantial potential in Earth observation, navigation, data processing, orbital servicing, manufacturing, energy and infrastructure.
What sits beyond SpaceX?
The upstream space economy begins with launch, but rapidly expands into several distinct layers.
There are constellations providing Earth observation, communications and navigation. There are businesses monitoring orbital activity and debris. There is an emerging in-space infrastructure market covering communications towers, transport, servicing, manufacturing, data processing and energy generation.
Beyond that sit longer-duration opportunities around lunar activity, resource extraction and human spaceflight.
The downstream market is equally important. It includes ground stations, cybersecurity, the transmission and storage of data, and the software needed to convert satellite observations into commercially useful information.
War is the immediate revenue engine
Asked where current demand is coming from, Boggett’s answer is emphatic: “Defence, defence and defence.”
The ten largest companies in Seraphim’s growth portfolio increased revenues by an average of approximately 80% over the preceding 12 months, with defence demand responsible for that growth. He also describes procurement cycles shortening materially as governments seek to acquire proven capabilities from agile technology companies.
Yet most of Seraphim’s companies were not established as defence contractors. Almost all are dual-use businesses: the same hardware, software and infrastructure can serve both sovereign and commercial customers.
Can Europe close its space capability gap?
Europe is ‘starting from scratch’ in the modern space race.
Germany is enthusiastic, the UK is lacking follow-on funding and falling behind.
Seraphim is a global investor. Mark describes its portfolio as approximately half US-based, with meaningful exposure to the UK and Continental Europe. He expects the US to remain the industry’s principal centre, although Europe’s share could increase as defence capital moves into the market.
When could dual-use revenues become predominantly commercial?
Mark reckons that defence currently represents around 80% of revenues across the sector. He believes that balance could invert within three to five years, although defence itself may continue growing strongly.
Two developments underpin that view.
First, larger constellations are producing richer and more frequent observations of the Earth. As revisit rates improve, data moves closer to real time. That makes it useful to a wider range of customers and increases its potential commercial value.
Second, satellite communications are connecting not only people but machines, sensors, vehicles and other Internet of Things devices. That creates a global communications layer capable of serving industries and locations that terrestrial networks cannot reach efficiently.
Defence spending is effectively helping companies build this infrastructure sooner.
How does AI change the economics of satellite data?
The constraint on commercial adoption has not necessarily been the volume of data collected from space. It has been the difficulty of moving, integrating and interpreting that data.
Historically, using satellite data required specialist teams, expensive systems integration and lengthy implementation projects. Industries such as mining, oil and gas and defence could justify that cost, but many mainstream businesses could not.
AI changes the integration layer.
Companies with AI-enabled data infrastructure can ingest new datasets more quickly, combine them with terrestrial information and incorporate the resulting insights into everyday decision-making.
Why could orbital data centres and energy change the market?
The combination of SpaceX and xAI makes more sense when viewed through the economics of AI infrastructure.
AI systems require growing amounts of compute and energy. SpaceX controls reusable launch, a large-scale satellite-manufacturing operation, an orbital communications network and, following its combination with xAI, an artificial-intelligence platform.
Mark argues that this creates an unusually integrated position from which to develop orbital computing infrastructure.
Energy is potentially the larger opportunity. Mark believes access to abundant solar energy in space could eventually support computing and other industrial processes.
What business models and investment moats are emerging?
Mark believes the strongest companies tend to be vertically integrated. They design and manufacture satellites, develop their own software and AI, operate their constellations and maintain direct relationships with end customers.
That creates a rapid feedback loop. Customer requirements feed directly into software, operations and the next generation of hardware without depending on multiple external suppliers.
Vertical integration is expensive and operationally difficult, but it can increase speed and defensibility. Boggett notes that Seraphim encourages portfolio companies to patent not only hardware designs but manufacturing methods, operational processes, algorithms, failure-recovery procedures and sector-specific uses of their data.
The resulting intellectual-property portfolios can become significant barriers to entry. They also reinforce the power-law nature of venture investment: the leading company attracts customers, capital and talent, making it progressively harder for later entrants to catch up.
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Private markets were designed around illiquidity, but the industry is now too large and too complex to rely solely on traditional exits. In this episode, Ross Butler speaks with Alex Branton, Chief Investment Officer at Nodem Capital, about what NAV really means, how private markets liquidity tools are evolving, and why NAV lending sits somewhere between credit, secondaries and structured equity.
Key Takeaways
NAV lending is not just a financing tool. It can be used for DPI acceleration, defensive liquidity or genuinely accretive investment opportunities.
Secondaries, structured secondaries and NAV loans sit on a spectrum. The distinction between debt and equity becomes less clear as loan-to-value increases.
NAV is not cash in the bank. It is a manager mark, shaped by valuation policy, comparable multiples, auditor review and GP judgement.
Evergreen funds sharpen the valuation question. If investors are buying and selling at NAV, the robustness of that NAV becomes central.
Private credit headlines may be overstating systemic risk. The bigger issue may be liquidity expectations inside certain fund structures, rather than underlying credit collapse.
Why does NAV matter so much in private markets?
NAV, or net asset value, is one of the most important reference points in private markets. It is used to value portfolios, calculate performance, support secondary transactions, price evergreen vehicles and underpin NAV lending facilities.
But NAV is also one of the most misunderstood concepts in the asset class.
In public markets, price is visible and continuous. In private markets, value is assessed periodically, often by the GP, based on company performance, comparable multiples, market evidence and valuation policy. That does not make NAV meaningless, but it does mean investors need to understand what sits underneath the number.
For Alex Branton, NAV is not simply a valuation figure. It is a signal. It tells investors something about the manager’s view of the portfolio, the quality of the underlying assets, the potential liquidity of those assets and the degree of confidence a lender or secondary buyer may have in the mark.
How has the private markets liquidity toolkit evolved?
As Ross observes, private markets have historically created value through illiquidity. Investors commit capital, managers invest it over time, and capital comes back when assets are sold.
That model still matters. But as private markets have scaled, a much broader ecosystem of liquidity tools has emerged.
Alex breaks the market down into several major categories.
LP-led secondaries
The traditional secondary market allows an LP to sell an existing fund interest to another buyer. This might involve a single LP position or a portfolio of fund stakes.
For large, institutional portfolios, this market can be highly active. For smaller or more complex positions, liquidity can be much harder to find.
GP-led secondaries
GP-led solutions include continuation vehicles, fund recapitalisations and strip sales. These allow a GP to hold assets for longer, provide optional liquidity to existing investors or bring in fresh capital around specific assets.
Single-asset continuation vehicles are an especially important part of the current market because buyers can underwrite a specific company rather than accepting a whole portfolio.
Structured secondaries and preferred equity
Structured secondaries are designed for situations where the buyer and seller cannot agree a clean market price.
Rather than forcing a binary sale at a disputed valuation, the parties agree an upfront amount, a preferred return and a future sharing mechanism. In practice, this allows liquidity to be created while leaving some upside participation with the original owner.
NAV lending
NAV lending allows a fund, LP or family office to borrow against the value of an underlying private markets portfolio.
At low loan-to-value ratios, this looks like credit. At higher loan-to-value ratios, it begins to look more like a structured secondary, because the capital provider is taking more equity-like risk.
That is why the episode repeatedly returns to the idea of a spectrum. These tools are not cleanly separated. They overlap.
Is NAV lending debt, equity or secondaries?
One of the most useful frameworks in the episode is Alex’s explanation that NAV lending exists on a continuum.
At one end, a NAV loan may be a conservative facility against a diversified portfolio, perhaps at 10 to 20 per cent loan-to-value. That is fundamentally a credit product.
At the other end, a capital provider might offer 60 per cent of NAV upfront, receive a preferred return and then share future proceeds. That starts to resemble preferred equity or a structured secondary.
The distinction matters because the higher the LTV, the more the lender is exposed to the actual exit value of the assets. In other words, the transaction begins to move from lending against value to participating in value.
This is why the language around NAV lending can be confusing. The same term can describe a conservative fund-level loan, a liquidity bridge, an offensive investment facility or something much closer to an equity risk-sharing arrangement.
What are NAV loans actually used for?
The controversy around NAV lending often assumes one narrow use case: a manager borrowing against a portfolio to distribute cash to LPs and improve DPI.
That does happen, and it is the use case that creates the most scepticism.
But Alex argues that the market has changed significantly. Before Covid, NAV lending was more closely associated with DPI acceleration. Today, he suggests, the dominant use case has shifted towards accretive investment during the life of the fund.
Examples include:
buying a discounted secondary position in a strong portfolio company
funding a strategic acquisition
supporting a winner inside the portfolio
avoiding a slow or impractical LP co-investment process
solving temporary liquidity constraints without selling a prized asset
This distinction matters. A NAV loan used to disguise weak exits is very different from a NAV loan used to double down on a high-quality asset at an attractive price.
The structure may be similar, but the signal is completely different.
Why is NAV lending controversial?
The controversy comes from the possibility that NAV lending can be used badly.
Ross compares NAV loans to dividend recaps at the fund level. That analogy is useful because, like dividend recaps, the structure itself is not inherently good or bad. The question is why it is being used.
Alex describes the problematic scenario clearly. A GP may hold a portfolio at elevated valuations, perhaps from 2018 or 2019 vintages that were acquired in a low-rate environment. The market may no longer agree with those marks. LPs may be asking for liquidity. Rather than selling assets and crystallising a lower valuation, the GP borrows against the portfolio and distributes capital.
That creates several concerns.
First, it may give the appearance of DPI without a true exit.
Second, it may delay recognition of weaker asset values.
Third, the NAV lender becomes structurally senior to LPs from future distributions.
Fourth, it can create a perception of misalignment between GP, LP and lender.
That is the source of the scepticism. If the assets are so strong, why not sell them?
Why might NAV lending be less risky than the headlines suggest?
Alex pushes back against the idea that NAV lenders are indiscriminately financing weak portfolios.
His argument is that the lender’s own incentives create discipline. NAV lenders are typically offering their investors a debt-like, low-loss product. They therefore need to be highly selective.
Conservative LTVs matter. A normal NAV facility may be around 10 to 15 per cent loan-to-value. The underwriting bar is high, and many potential transactions are rejected quickly because the use case, portfolio quality or valuation does not work.
There are also governance mechanisms. In newer funds, NAV lending powers may be built into the fund documents. Where facilities are used to take money out of the fund, LPAC consultation is often expected. The greater the potential alignment issue, the more explanation is required.
The result is a more nuanced picture. NAV lending can be misused, but the market also contains important guardrails: conservative LTVs, lender discipline, portfolio underwriting and LP governance.
Who provides NAV lending?
The NAV lending market includes both banks and specialist non-bank lenders.
Banks typically focus on very low-LTV facilities against cash-flowing portfolios. They may lend where repayment can be supported by expected dividends or distributions, rather than relying on an uncertain exit. For banks, NAV facilities can also form part of a broader relationship that includes subscription lines, capital call facilities, IPO work or other services.
Specialist non-bank lenders operate differently. Larger platforms such as 17Capital provide NAV and preferred equity facilities to major buyout funds, often at significant scale.
Nodem Capital sits in a different part of the market. Alex describes its focus as the mid-market of NAV lending, particularly facilities in the $20 million to $100 million range for mid-sized private equity firms, family offices and investors whose portfolios may be too specialist, too small or too inefficiently priced for the largest providers.
He also identifies a gap below $20 million, where high-quality family office or HNW portfolios may struggle to access appropriate financing because the transaction size is too small for banks or scaled lenders.
What does secondary pricing reveal about private markets?
A recurring theme in the episode is that liquidity is highly concentrated.
In venture, Alex notes that much of the liquidity is concentrated in a small number of well-known names. The same principle applies, to a degree, in private equity. If investors talk about private market pricing, they may really be talking about a handful of highly visible companies.
For large, high-profile private companies, secondary markets can be relatively efficient.
For smaller, subscale or minority positions, especially in European mid-market or growth portfolios, liquidity can be much weaker. A high-quality portfolio may still attract bids far below NAV simply because the buyer requires a margin of safety and the market is thin.
That is where NAV lending or structured solutions may be useful. If the holder likes the assets and disagrees with the secondary market price, borrowing against the portfolio may be preferable to selling at a deep discount.
This is one of the episode’s most important distinctions: low secondary pricing does not always mean poor asset quality. It may also reflect market inefficiency, scale constraints and liquidity scarcity.
How robust is NAV?
How robust are manager marks?
The best GPs are rigorous and can be trusted to a meaningful degree. But NAV still involves discretion. Managers use comparable multiples, company performance data and valuation analysis. Auditors provide a sense check. Yet the GP’s input remains significant.
The real test is not just the reported NAV, but the relationship between NAV and actual transaction evidence.
If comparable assets are selling at materially lower multiples than those used in a fund’s marks, that matters. A NAV lender will usually make its own assessment. If the lender disagrees strongly with the reported value, it may walk away. If it has some reservations, it may lend at a lower LTV.
The message for LPs is equally important. NAV is useful, but it is not the same as cash. Investors need to understand how marks are built, how they compare with realisations and whether the GP is adjusting valuations appropriately when market conditions change.
For long-term LPs in closed-ended funds, final cash distributions ultimately matter most. But for secondaries, NAV loans and evergreen funds, NAV becomes much more consequential because it is the basis on which people enter, exit, lend and transact.
Why do evergreen funds sharpen the valuation issue?
Evergreen funds are one of the most important developments in private markets access.
They simplify the experience for wealth investors. Instead of dealing with capital calls, long fund lives and complex cash flow management, an investor can allocate to a structure that looks and feels more like a mutual fund, while still providing exposure to private assets.
Alex is broadly positive about this development. He sees evergreens as a route to democratising access and bringing wealth capital into private markets.
But the structure introduces a new challenge: implied liquidity.
Traditional LP funds do not give investors an option to redeem. That hard commitment is part of the structure. Evergreens, by contrast, often offer periodic liquidity, perhaps around 5 per cent per quarter, subject to gates.
That creates the possibility of an asset-liability mismatch. The underlying assets may be long duration, but investors may expect shorter-term access to capital. If negative headlines cause outflows, gates may be triggered. The underlying asset problem may be manageable, but the optics can become difficult.
Ross pushes back on the idea that retail capital is inherently short-term. His view is that individuals can be long-term investors too, provided expectations are properly set. Alex agrees. The deeper issue is not necessarily investor type, but education, suitability and the risk of overselling liquidity.
What is NAV squeezing, and should investors worry?
The episode also touches on the debate sometimes referred to as NAV squeezing, although Ross suggests NAV stretching may be the better phrase.
The issue is this: if a secondary buyer acquires a portfolio at 80 cents on the dollar, can that buyer then mark the same portfolio at 100 cents on the dollar inside its own fund?
To some critics, that looks like an immediate valuation uplift without economic creation.
But Ross and Alex both take a more nuanced view. A discounted transaction price may reflect forced liquidity, market friction or the seller’s specific circumstances. It does not always mean that 80 is the “true” long-term value.
The philosophical question is whether price equals value.
If one believes the transaction price is the value, then marking at 100 looks wrong. If one accepts that private market transactions can occur at discounts for structural reasons, then the higher mark may be legitimate, provided the methodology is transparent and defensible.
For investors in evergreen funds, this matters because new investors may be buying in at NAV. They therefore need to understand how assets are valued, particularly where the fund acquires assets at discounts in the secondary market.
Is private credit facing a systemic problem?
The final section of the conversation turns to private credit, the recent media focus on software exposure and the so-called SaaS apocalypse.
Alex does not see a systemic issue.
He distinguishes between bank lending and non-bank private credit. Broadly syndicated loans are more visible, while private credit is less transparent. That opacity can make it harder to know precisely how much stress exists, particularly because lenders can amend, extend and refinance rather than immediately recognise defaults.
He acknowledges that there may be weakness at the smaller end of the market and that software exposure is meaningful within direct lending. But he also argues that many software-related borrowers remain recurring revenue businesses with healthy cash flows.
His broader point is that the market may be conflating two different issues:
actual credit defaults
liquidity pressure in certain fund structures
Gating, investor outflows and negative headlines do not automatically mean a systemic credit crisis. They may instead reflect a mismatch between investor expectations and the liquidity profile of the underlying assets.
This is not complacency. Alex says the market should be watched carefully. But his base case is that the current anxiety is overblown.
What is Nodem Capital’s role in the market?
Nodem Capital is positioned as a specialist NAV lender for the mid-market.
Alex describes the firm as a UK asset manager backed by a family office, with a focus on understanding private markets portfolios that may not fit neatly into bank or large-platform underwriting models.
The ambition is to become a go-to liquidity partner for family offices, mid-sized private equity firms and investors with good portfolios that are not well understood by the broader market.
The point is not that every situation requires a NAV loan. Sometimes a secondary sale, a structured solution or another form of liquidity may be more appropriate. But Alex sees value in helping investors understand the full range of options before deciding which tool fits the problem.
The bigger lesson from this episode
The episode is not simply about NAV lending. It is about the way private markets are changing as they scale.
Private markets were built around patience, commitment and illiquidity. Those features remain central to the asset class. But as the market grows, investors, managers and advisers need more tools to deal with delayed exits, ageing portfolios, wealth capital, continuation vehicles and secondary pricing.
The liquidity toolkit is expanding because the old model is under strain.
But innovation always creates trade-offs.
NAV lending can be accretive, or it can disguise weak exit activity.
Evergreens can democratise access, or they can oversell liquidity.
Secondaries can reveal market discipline, or they can reflect temporary pricing inefficiency.
NAV can be a useful measure, or it can be mistaken for cash.
That is why the signal matters. In private markets, the use of liquidity tools tells investors something about quality, confidence, incentives and discipline.
The challenge is not simply to create liquidity. It is to create liquidity without damaging the alignment that made private markets valuable in the first place.
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Florencia Kassai, Managing Partner and Head of Buyout at Inflexion, joins Ross Butler following Inflexion’s latest buyout fundraise to discuss what it takes to invest well in a more selective private equity market.
The conversation ranges from sub-sector depth and buy-and-build execution to direct origination, continuation funds, European expansion and why Flor believes private equity is ultimately a talent business more than an investment business.
Covered in this episode:
Why 2026 is a tricky but potentially attractive environment for disciplined investors
How Inflexion repeats sub-sector playbooks across strategies and geographies
Why talent, trust and local relationships matter in mid-market origination
How continuation funds can extend ownership of strong assets
What darts, skincare, TICC and wealth management reveal about mid-market opportunity
The big take
Private equity’s edge in 2026 is the ability to identify resilient companies with pricing power, then support them with sector knowledge, talent upgrades, operational expertise and long-term local relationships.
Flor’s central point is that the best firms are in the talent business. Good management teams identify the next problem before investors do. Strong investors know how to surround those teams with the people, data, commercial support and M&A capability needed to move faster.
Why does 2026 sharpen the private equity playbook?
Flor describes 2026 as a difficult but fascinating environment for investing. Geopolitical pressure, AI disruption and wider uncertainty all make deal selection harder.
But those same conditions also sharpen the focus. Investors need businesses with pricing power, proper margins and a reason to exist. In other words, this is a market that rewards fundamentals.
The implication is clear: in uncertain markets, generalised sector knowledge is not enough. Investors need to understand the specific verticals where they have repeatable experience, relationships and insight.
Why does sub-sector expertise matter more than sector labels?
Inflexion invests across six broad sectors: financial services, business services, industrials, consumer, technology and healthcare. But Flor says the real work happens beneath those labels, in narrow verticals where the firm can build accumulated advantage.
One example is testing, inspection, certification and compliance. Inflexion has invested repeatedly in the TICC space, including Celnor, a platform launched to consolidate a fragmented market.
The point is not just to know a sector. It is to compound knowledge. Each investment teaches the team what works, what fails, how quickly acquisitions can be integrated and where management teams typically need support.
How does Inflexion think about management teams?
For Flor, talent is not one diligence item among many. It is the central variable.
She argues that getting the team right is 95% of the equation. A strong management team will spot problems before the investor does, diagnose what needs to change and ask for targeted support.
That changes the investor’s role. The private equity firm is not there to dictate from the outside, but to provide the infrastructure around the team: talent, commercial support, AI expertise, international expansion, pricing, M&A and specialist operating help.
This is why Inflexion has invested heavily in its Value Acceleration team, particularly its talent capability.
Where do continuation funds fit?
Inflexion’s continuation fund was raised to support four portfolio companies where the firm believed there was still meaningful value to create.
Flor frames this as a practical question. If you already own a business you know well, with a management team that wants to keep working with you and a clear M&A-led growth plan, why sell it only to spend years searching for another business of similar quality?
The continuation structure allowed Inflexion to provide liquidity to existing investors while raising additional capital to support the next phase of growth.
Flor is careful to acknowledge that continuation funds can be used well or badly. The distinction is whether the structure genuinely supports a clear value-creation plan, or merely delays a difficult exit.
Is buy-and-build the whole strategy?
No. Flor is clear that M&A is a tool, not the strategy itself.
In some cases, such as Celnor or Absolute Financial Group, buy-and-build is central to the value-creation plan. In others, such as Medik8, growth can be primarily organic.
M&A can accelerate international expansion, entry into adjacent markets or product-line development. But it also creates cultural risk. If an acquired company is poorly integrated, the value can disappear quickly, particularly in people-heavy businesses.
The challenge is to keep what made the acquired business special, without crushing it under the mothership.
What Flor’s career reveals about private equity
Flor did not set out to become a private equity investor. Originally from Argentina, she studied industrial engineering and initially expected to work in manufacturing.
Her career took her from an internship at ICI Paints to private equity in Latin America, JP Morgan in New York, Wharton, Bain & Company in London, Hg Capital and then Inflexion, which she joined in 2011.
It is a career that combines analytical training, international mobility and commercial judgement. It also reflects one of the themes of the episode: private equity is not only about numbers. It is about people, adaptability and pattern recognition across many different business contexts.
Guest
Flor Kassai is Managing Partner and Head of Buyout at Inflexion. She leads Inflexion’s Buyout Fund and is a member of Inflexion’s Executive, Investment and Responsible Investing Committees. She joined Inflexion in 2011, having previously worked at Hg, Bain & Company and JP Morgan.
You can watch our episode with Flor’s Inflexion-colleague, David Whileman, here.
Private markets are moving into the adviser channel faster than most firms are building real capability. This short diagnostic looks at how consistently your team can explain, challenge and navigate private markets in client conversations.
In less than 5 minutes, you’ll see:
💡Where your capability is strong
💡Where it varies across individuals
💡Where your firm may be exposed as the market evolves
No preparation required. Instant score and clear next step.
👉 Take the assessment: https://private-markets-capability-assessment.scoreapp.com/
Evercore is the global number one in secondaries advisory, controlling more than half the market. So it’s fair to say that Nigel Dawn sees almost everything. And what he sees above all, is opportunity.
Secondaries are becoming central to how private markets function -from pricing and liquidity to portfolio construction and capital recycling.
At roughly 2% of global private markets NAV, secondaries remain small relative to the overall asset base. Yet their importance is growing rapidly, not as a niche or distressed corner of the market, but as a core mechanism through which investors actively manage exposure and test valuation assumptions.
What role do secondaries play in private markets?
Secondaries can be understood as more than just a sub-asset class. They are increasingly the mechanism through which private markets operate in practice.
This is where portfolios are priced, where liquidity is created and where the theoretical valuation of an asset meets the reality of what a buyer is willing to pay. In that sense, secondaries are the closest thing private markets have to continuous price discovery.
While public markets operate with constant trading and visible pricing, private markets rely on periodic NAV updates. The secondaries market bridges that gap. It is where valuation, liquidity and investor behaviour intersect.
How large is the secondaries market today?
Despite the attention it receives, the secondaries market remains relatively small. Annual transaction volumes of around $225 billion represent only a fraction of total private markets NAV.
That imbalance highlights how early the market still is relative to the scale of private assets globally.
As allocations to private markets continue to increase, the expectation is that secondaries will grow in parallel. This is driven by structural factors rather than cyclical ones, including:
Larger and more complex LP portfolios
Greater need for liquidity and rebalancing
Increased participation from private wealth capital
More sophisticated GP-led solutions
The implication is that secondaries are not just growing, they are becoming structurally embedded.
What does a sophisticated secondaries strategy look like?
The most advanced LPs treat private markets as a dynamic portfolio rather than a static allocation.
This manifests in several ways. Investors are more likely to be repeat sellers, regularly using secondaries to reposition portfolios rather than relying solely on natural distributions. They are also increasingly focused on relative value, assessing whether capital is better deployed in newer vintages or different strategies.
The result is a more active approach to private markets investing, where secondaries play a central role in capital allocation, not just liquidity provision.
Are continuation vehicles misunderstood?
Continuation vehicles have become one of the defining features of the modern secondaries market. They are also one of the most misunderstood.
The common narrative suggests they are used to delay exits or avoid crystallising losses. Nigel’s perspective is more nuanced.
In many cases, continuation vehicles are created around high-quality assets with further upside. The GP may believe that selling today would transfer future value to another buyer, often a competitor. Instead, a continuation structure allows the GP to retain ownership while offering liquidity to existing investors.
In practical terms, continuation vehicles:
Provide optional liquidity to LPs
Allow GPs to extend ownership of strong assets
Introduce new capital to fund further growth
Rather than being a sign of weakness, they often reflect conviction in the underlying asset.
How are conflicts managed in GP-led transactions?
Continuation vehicles are inherently conflicted. The GP is effectively both seller and buyer.
However, the market has developed clear processes to manage this. Industry guidelines, including those from the Institutional Limited Partners Association, emphasise transparency and fairness.
Key safeguards include:
Running competitive auction processes
Providing equal access to information for all participants
Securing LP advisory committee approval
Ensuring investors have the option to hold or sell
Crucially, LPs are not forced sellers. The ability to roll into the new structure provides a meaningful protection against misaligned incentives.
How is price actually determined in secondaries?
One of the most important concepts in private markets is the distinction between value and price.
NAV represents the manager’s assessment of value, typically based on quarterly reporting and audited annually. Secondary pricing reflects something different. It incorporates the return expectations of the buyer, the quality of the asset and prevailing market conditions.
In practice, pricing is determined through a combination of:
GP-reported valuations
Direct diligence on underlying assets
Cross-referencing with comparable investments
Negotiation between informed participants
This creates a rigorous, multi-layered process. It is less transparent than public markets, but not less sophisticated.
Is there growing scepticism around private markets valuations?
There is increasing scrutiny, particularly when public market valuations move sharply.
However, private markets behave differently. Valuations tend to adjust more gradually and incorporate a broader set of inputs than public comparables alone. They are less influenced by short-term sentiment and more anchored in long-term cash flows.
The secondaries market plays an important role here. It acts as a validation mechanism, testing whether NAVs are supported by executable prices.
What impact is private wealth capital having?
Private wealth capital is becoming an increasingly important part of the secondaries ecosystem. Nigel estimates that 10–15% of capital now comes from retail-style vehicles.
This capital is typically deployed through established managers and often alongside institutional funds. As a result, it has not materially disrupted pricing discipline.
One observable trend is a preference for high-quality assets with visible growth potential, reflecting the performance requirements of these vehicles.
What is the outlook for secondaries?
The direction of travel is clear. Secondaries are moving from a niche segment to a core component of private markets.
Several areas are likely to drive growth:
Continued expansion of GP-led transactions
Increased use of secondaries for portfolio management
Greater participation from private wealth
Rapid development of private credit secondaries
Private credit, in particular, is expected to follow the trajectory of private equity secondaries, potentially becoming a major market in its own right.
Why this matters
Secondaries are not just about liquidity. They are about how private markets function at scale.
They provide the mechanism through which assets are priced, portfolios are adjusted and capital is recycled. As private markets continue to grow, secondaries will play an increasingly central role in shaping outcomes for both GPs and LPs.
For anyone looking to understand the reality of private markets, rather than the theory, secondaries are the place to look.
Private credit has scaled rapidly into a trillion dollar market, yet much of the current narrative is dominated by concerns around defaults, liquidity and AI disruption. In this episode, David Hirschmann, Co-Head of Permira Credit, explains to Ross Butler why the growth of private credit is fundamentally structural, not cyclical, and why much of the criticism reflects a misunderstanding of how credit actually works.
We explore how direct lending competes with syndicated loans, why equity cushions matter more than headline leverage, and how private credit investors think about downside risk in a world increasingly shaped by technological change. It’s essentially a technical view of the asset class, far removed from the noise.
The big take
Private credit is not a temporary solution filling a market gap. It is a structural part of the modern financial system, underpinned by regulatory change, private equity growth and the need for flexible, long-term capital.
Much of the perceived risk discussed in the media stems from applying an equity mindset to a credit strategy. When viewed correctly, through cash flow durability, capital structure and recovery dynamics, the asset class looks far more resilient than headlines suggest.
Why has private credit become a structural asset class?
The starting point is the post-GFC shift in bank behaviour.
Following the Global Financial Crisis, banks were forced to reduce long-term lending due to capital constraints and regulatory pressure. That created a persistent financing gap, particularly in the mid-market, where private lenders stepped in.
What began as a regulatory by-product has since evolved into a core part of capital markets. As private funds have scaled, they have expanded beyond mid-market lending into larger transactions, effectively becoming an alternative to syndicated loan markets in certain situations.
This is not cyclical. It is structural.
Where do banks still play a role?
Despite the growth of private credit, banks remain embedded in the ecosystem.
They continue to provide:
Short-term corporate facilities
Fund-level leverage
Underwriting for syndicated transactions
The relationship is therefore hybrid rather than adversarial. Private credit has not replaced banks, it has reshaped how capital is delivered, particularly in areas where flexibility and certainty are valued over price.
Why are borrowers choosing private credit over syndicated loans?
The key trade-off is not cost, but certainty.
Syndicated loans typically offer lower pricing, but they come with execution risk and limited flexibility once the deal is completed. By contrast, private credit offers:
Speed of execution
Certainty of funding
Pre-committed follow-on capital
This is particularly valuable for sponsor-backed businesses pursuing acquisition strategies, where access to capital at the right moment matters more than marginal differences in pricing.
Borrowers are increasingly willing to pay a premium for that certainty.
Does relationship lending create weaker credit discipline?
A common concern is that close relationships between lenders and sponsors could lead to leniency.
In practice, the opposite tends to be true.
Direct lending transactions typically start with conservative capital structures, often with loan-to-value ratios in the 30–40% range. That means there is significant equity beneath the debt, creating strong incentives for sponsors to support their portfolio companies during periods of stress.
When problems arise, the typical response is not immediate enforcement, but negotiated solutions:
Equity injections from sponsors
Covenant resets
Maturity extensions
The relationship is not soft. It is aligned.
What actually happens in a default scenario?
One of the more useful insights in the episode is how private credit behaves when things go wrong.
Defaults do not automatically translate into losses. Because lenders often operate in small clubs with close access to management, they can take an active role in restructuring. This may involve converting debt into equity, installing new leadership and repositioning the business for recovery.
In these situations, recovery outcomes depend less on initial entry valuation and more on operational execution post-distress.
This is where experience matters most.
Are current default fears overstated?
Recent market commentary has suggested that private credit could face default rates as high as 15%.
Hirschmann’s view is that such scenarios are highly pessimistic and, if realised, would represent a broader credit event rather than a private credit-specific issue.
In other words, a default spike of that magnitude would imply systemic stress across all credit markets, not a structural weakness in private lending itself.
Is AI a real risk to private credit portfolios?
AI is clearly a major theme in current market discussions, particularly in software.
The key distinction, however, is between equity risk and credit risk.
Equity investors are exposed to exit multiples and valuation compression. Credit investors are focused on something different:
Cash flow stability
Revenue visibility
Ability to refinance
A company may struggle to achieve a high exit multiple, impacting equity returns, while still comfortably servicing its debt.
This is where much of the confusion arises.
Why does information advantage matter in private credit?
Private credit lenders typically operate with far greater access to information than participants in public debt markets.
As direct lenders, they have:
Regular dialogue with management
Visibility on current trading
Direct access to sponsors
This creates a more informed underwriting and monitoring process, particularly during periods of volatility.
In contrast, syndicated loan investors rely more heavily on periodic reporting and less direct engagement.
What do investors still misunderstand about private credit risk?
One of the most persistent misconceptions is that risk can be assessed through a small number of metrics, such as leverage or covenant structure.
While these factors are relevant, they are only part of the picture.
True credit assessment requires a broader view, including:
Business quality
Market position
Sponsor behaviour
Cash flow resilience
Reducing credit risk to a handful of metrics misses the complexity of the underlying investment.
The low-down
Private credit is often discussed through the lens of macro narratives, AI disruption, liquidity concerns or default forecasts.
This conversation reframes the discussion around fundamentals.
Private credit is a structurally embedded asset class with distinct characteristics, particularly around alignment, information access and recovery dynamics. The real risk is not the asset class itself, but misunderstanding how it behaves.
For investors, the takeaway is clear: private credit requires a different framework. When assessed on its own terms, rather than through an equity lens, it looks far more robust than the headlines suggest.
Drawing on more than two decades of empirical research and extensive back-testing, Professor Oliver Gottschalg explains why algorithmic decision support can outperform “normal” human allocation, particularly in fund selection and secondaries pricing, without relying on better data or privileged access.
In this episode, we look at sets out how machine learning can be applied to private markets and why they are structurally better suited to algorithmic allocation than public markets.
The big take
Machine learning can materially improve PE outcomes. The first step to demonstrate this: re-weighting existing fund portfolios – and that’s before we get to portfolio construction.
Prediction now matters more than explanation once decision-making crosses a complexity threshold
Secondaries are meaningfully inefficient, creating scope for systematic pricing and portfolio construction
Data does not need to be perfect to be useful, but models must be rigorously back-tested
Human judgement still matters, but only as a downside governor, not a source of optimism or narrative bias
Who is Oliver Gottschalg, and why does his work matter?
Oliver Gottschalg is one of the most widely cited academics in private markets. He holds degrees from Karlsruhe, Georgia State University and INSEAD, teaches private equity and buyouts at HEC Paris, and directs the HEC Private Equity Certificate. Alongside his academic work, he founded Gottschalg Analytics, a data and analytics platform used by LPs and GPs to analyse risk, return drivers and manager skill in private equity.
His work sits at the intersection of academic rigour and real-world allocation, making him unusually well placed to assess what machine learning can and cannot do in private markets.
Can algorithms really outperform human allocators in private equity?
Oliver shows that algorithmic decision support can outperform a large proportion of real-world allocation decisions, especially where humans are asked to weigh dozens of interacting variables consistently over time.
Using conservative back-tests on US public pension data, he demonstrates that modest re-weighting within existing fund commitments, guided by machine learning predictions, would have produced billions of dollars of incremental value. Crucially, this improvement does not rely on better access, new strategies or hindsight.
Why private markets suit machine learning better than public markets
A common objection to back-tested strategies is that alpha disappears once deployed. Private markets are structurally different.
Private equity transactions are discrete, opaque and slow-moving. Trades are not immediately visible, and algorithmic activity does not automatically move prices in the same way as public markets. This means predictive models are less likely to be arbitraged away quickly, particularly in areas such as secondaries.
How machine learning changes secondaries pricing
One of the most compelling parts of the discussion focuses on LP-led secondaries.
Oliver argues that the secondary market is inefficient in a technical sense: prices paid for fund stakes correlate weakly with ultimate forward returns.
Instead of relying on bottom-up portfolio company valuation, his approach asks different questions:
How conservative or aggressive is a GP’s valuation policy?
How much future value-creation capacity does the GP realistically have?
Are team focus, strategy drift or asset mix likely to impair outcomes?
Machine learning allows these factors to be weighted simultaneously, creating a systematic approach to pricing and portfolio construction that could materially lower the cost of liquidity in private markets.
Imperfect data is not the real problem
Private equity data is incomplete, inconsistent and often delayed. Oliver is explicit about this. His point is that perfection is not the bar. The relevant question is whether imperfect data, treated consistently, still points investors towards relative outperformance.
After thousands of back-tests across different periods and market regimes, his conclusion is pragmatic: if a model survives conservative testing and structural change, it can be trusted as a decision support tool.
The trade-off between transparency and predictive power
As models become more complex, interpretability declines. Oliver is candid about this “black box” problem. Once a model incorporates dozens of interacting features, causal explanation becomes impractical.
Trust is therefore built not through narrative clarity, but through:
disciplined training and validation
conservative assumptions
repeated evidence that predictions remain robust across cycles
This represents a cultural shift for an industry accustomed to storytelling.
The role of humans in an algorithm-assisted future
But relax, humans are not removed from the process. Instead, their role changes.
Humans should be able to override models only to reduce expected returns, never to inflate them. If there is information the model cannot yet see, such as team departures or governance issues, the human can step in. What the human should not do is override the model upward based on brand, relationships or confidence.
He likens this to advanced driver assistance systems: the machine does most of the work, while the human prevents catastrophic error.
What this means for LPs, GPs and the wider market
For LPs, this challenges the idea that superior judgement alone is a durable edge in fund selection. Discipline, calibration and governance may matter more.
For GPs and secondary managers, it raises uncomfortable questions about fee structures and defensibility as parts of the investment process become systematised.
At a market level, Oliver outlines a plausible path towards lower-cost, more scalable private market products, potentially expanding access without relying solely on distribution or regulatory change.
Why this episode matters
This is not a discussion about hype or distant futures. It is a grounded, evidence-led examination of what machine learning is already capable of in private equity, where it fits, and where human judgement remains essential.
Cyril Demaria-Bengochea is Head of Private Market Strategy at Julius Baer, Associate Professor at EDHEC Business School, and the author of several leading books on private equity. He has also advised Invest Europe, ILPA, and the European Commission, which gives him a rare vantage point across academic evidence, investor governance, and the day-to-day realities of portfolio construction for private wealth.
In this conversation, Ross and Cyril pick apart what is really changing in private markets right now. Fundraising and exits may be slower, but innovation has accelerated, particularly in structures designed to connect institutional managers with the bespoke needs of private clients.
Hyper-novelty in private markets: innovation as a response to constraints
Cyril agrees innovation is native to the industry, but argues the current wave is also a rational response to market conditions: higher rates, slower exits, and more pressure to provide liquidity without forcing sales.
That dynamic has pushed tools like continuation funds and GP-led secondaries from specialist territory into mainstream portfolio management. It is not simply reinvention for its own sake. It is the industry adapting to a world where the old exit rhythms no longer apply.
Evergreen funds and the myth of “semi-liquid”
Cyril explains the core tension: evergreen can be a sensible answer to the complexity of closed-end cash flows, but it can also become pro-cyclical if investor behaviour turns herding and redemption pressure rises at precisely the wrong moment.
This is why he dislikes the term “semi-liquid”. If everyone can gate at the same time, the promise of liquidity becomes more marketing than reality. The real test for evergreen products is not the steady-state environment, it is how they behave during stress, when the best opportunities often appear and the worst time to become a forced seller arrives.
Listed private equity vs unlisted evergreen: liquidity, volatility and correlation
Ross makes the case that listed private equity vehicles can offer much of the same exposure as evergreen funds, with the benefits of public-market liquidity. Cyril’s response is a useful portfolio construction lesson. Listed vehicles bring stock-market noise, particularly discounts to NAV, and they tend to correlate strongly with broader equity indices.
Unlisted evergreen products, by contrast, can behave more like an “anchor” through smoother NAV progression, which can matter to clients who value predictability and lower mark-to-market volatility. The key point is not that one structure wins universally, but that the right choice depends on what the investor is optimising for: liquidity, stability, diversification, or simplicity.
Private credit: filling a void, not creating a new systemic bomb
On private credit, Cyril takes a measured view that avoids both complacency and sensationalism. Stress exists, particularly as rates stay higher and liability management exercises rise, but that does not automatically translate into a hidden reservoir of catastrophe. He also notes the governance dynamic that often gets missed: direct lenders hold their loans and live with outcomes, which can impose a different kind of discipline.
The information problem: why private share trading is not a “plumbing” issue
In private markets, information is expensive to produce and due diligence is deep. Trying to mimic public market trading without public market disclosure is, in Cyril’s view, an unhealthy direction of travel.
What the industry still needs to fix: transparency in evergreen
If private wealth is going to be a sustainable relay of growth, evergreen products need better transparency and more usable granularity for due diligence. Closed-end structures have well-developed data room discipline. Evergreen, by contrast, can be harder to analyse precisely because the investor base is wider and information often becomes more controlled.
Will Dunham is President and CEO of the American Investment Council, the largest private equity and private credit trade association in the United States. Representing firms from trillion-dollar platforms to small and mid-market managers, he is the industry’s front-line advocate in Washington, charged with protecting private capital’s licence to operate and correcting the widening gap between online rhetoric and real-world impact.
We explore why private equity is more embedded in American life than most people realise, how political narratives have diverged from the data, and why Dunham believes long term private capital remains aligned with the interests of workers, savers and local communities.
Main Street, not Wall Street: where private equity actually shows up
One of Dunham’s most powerful tools in Washington is a simple list: every private-equity-backed company in a policymaker’s district. The surprise is universal. Around 13 million Americans now work in companies backed by private capital, and 85 per cent of recent investment has gone into small and mid-sized firms with 500 employees or fewer.
These businesses don’t carry a sign saying “backed by private equity”. They are ice-cream brands scaling from a food truck to national distribution, manufacturing companies reshoring US production, and medical innovators developing new technologies. For Dunham, each investment is a long bet on the US economy. If workers and communities don’t succeed, neither do the firms backing them.
Online narrative vs empirical reality
Google “private equity and housing” and you’ll find a flood of alarmist headlines. The numbers tell a different story. Private equity owns less than 1 per cent of US single-family homes, making the idea of “cornering the market” mathematically impossible. Instead, firms are increasing supply through build-to-rent communities and rent-to-own models that bridge families into good school districts while they save for deposits.
Healthcare follows a similar pattern. The headlines fixate on negative anecdotes, but private investment has funded 250+ urgent-care clinics, expanded rural access, and backed medical-device breakthroughs that would not have been financed easily in public markets. As Dunham puts it, the antidote to bad anecdotes is good data, and the research on access and quality is far more balanced than the headlines suggest.
Private credit: grown-up capital, not systemic risk
Despite growing concern from commentators, Dunham sees private credit as the opposite of systemic. Funds are financed by equity, not short-term deposits, which avoids the classic mismatch that destabilises banks. The Federal Reserve has echoed this view. Demand is growing organically as businesses seek long-term, partnership-oriented capital at moments when they are not ready to sell.
Ross notes that the leverage-on-leverage narrative simply does not match how the asset class actually works. Dunham agrees: private credit is filling a financing gap, not creating a new fault line.
The next frontier: opening 401(k)s to private markets
US public pension schemes have long invested in private equity and often cite it as their strongest performing allocation. Defined-contribution savers, however, have been locked out. Recent moves by the Trump administration instruct the Department of Labor to introduce clear guard rails so that professionally managed target-date funds can allocate to private markets.
The rationale is simple. Public markets have become highly concentrated, while the number of listed US companies has halved over 25 years. Doing nothing is not conservative; it increases concentration risk. Allowing diversified access to thousands of private companies may, in Dunham’s view, be the more prudent option for long term savers.
Defending the licence to operate
Dunham resists the caricature of a powerful lobby machine. He describes the AIC as a translator between investors and policymakers, effective only because the underlying economic contribution is real. The biggest threats are not dramatic policy shocks but many small, incremental steps that make it harder to invest, grow companies and create jobs.
Private capital, he argues, is deeply embedded in America’s economic story: from reshoring manufacturing to national-security supply chains to more than 500 AI and data-centre investments in the past five years. The task now is to make that story visible.
As Dunham says, the licence to operate is earned one district, one company, and one conversation at a time.
David Nowak is President of Brookfield’s Private Equity Group. He leads Brookfield’s North American private equity business and its evergreen strategy, and brings a distinctly contrarian, operations-led perspective, shaped by more than a decade inside one of the industry’s most integrated investment platforms.
We explore how Brookfield identifies essential-service businesses that are misunderstood, how it deploys its information advantage across the broader Brookfield organisation, and why a dual-sponsorship model between investors and operators produces more repeatable value creation.
Contrarian by design: buying what others misread Brookfield avoids thematic investing. Instead, the focus is on essential products and services where perceived risk diverges from actual risk. When everyone else is saying ‘climate change’ and renewables, they bet big on nuclear. When EVs make the combustion engine look uninvestable, they think outside the box.
One deal, two owners: the pilot / co-pilot model Every investment has two equal sponsors: an investor and an operating leader. In underwriting, the investor is “pilot” and the operator “co-pilot”. In portfolio management, the roles reverse. Both remain on the file through exit, removing the typical tension between deal teams and operators. More than half of Brookfield’s private-equity returns come from operational improvement, not leverage.
Embedded asset and field agents Brookfield’s operations team comprises c.35 senior operators who sit inside the private equity floor, not alongside it. And before rising to senior vice president, every investor is seconded into a portfolio company for a year, often in remote locations. The aim: develop judgement, understand day-to-day constraints, and replace spreadsheet assumptions with operational reality.
Our man in Alaska Value creation comes from repeatable, grounded work: retooling supply chains, introducing dynamic pricing, tightening working-capital cycles, and reshaping organisational design. Brookfield’s teams seconde into companies, work shoulder-to-shoulder with management, and stay for the full journey from carve-out to maturity. The model is simple but demanding: pick the controllable levers, apply rigour daily, and compound small gains.
Culture: humility, apprenticeship, and earned responsibility Brookfield’s open-plan layout is intentional: no offices, a flat structure, and constant exposure to how decisions are made. Young professionals are given responsibility early, but are expected to put in their 10,000 hours, learn from senior leaders, and keep politics far from their career ambitions. As David says: “You have one reputation. Spend it wisely.”
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Contact Information:About Fund Shack: Fund Shack is a private equity podcast and digital media channel for alternative investment professionals. Fund Shack is produced by Linear B Group Limited.
Anthropologist and best-selling author Jack Weatherford, whose landmark book Genghis Khan and the Making of the Modern World reshaped our understanding of history, joins Ross Butler to explore how the Mongol Empire fused creative destruction with long-term institution-building.
Far from being merely conquerors, the Mongols built one of the earliest global systems of commerce, meritocracy and capital allocation.
Jack explains how Genghis Khan dismantled corrupt elites, elevated artisans and merchants, and empowered women as investors through ortōq partnerships—private trading ventures that echo modern private equity. Ross describes Genghis Khan as the world’s most effective asset owner.
The discussion connects thirteenth-century portfolio thinking, religious tolerance, census and tax innovation, and technological transfer—from paper money to movable type—to the modern dynamics of private markets. What can investors learn from a society that turned warriors into shareholders and empire into enterprise?
This episode blends anthropology, finance and ethics to show why creative destruction only endures when creation wins.
Contact Information:About Fund Shack: Fund Shack is a private equity podcast and digital media channel for alternative investment professionals. Fund Shack is produced by Linear B Group Limited.
