The European Commission’s Market Integration Package proposes meaningful modernisations to the EU’s regulatory landscape for the bloc’s financial sector. Designed to reduce fragmentation, improve supervisory consistency and support cross-border activity, the proposed reforms directly target challenges faced by private markets, where complex multi-jurisdictional structures and cross-border fundraising are standard. Angel Ramon Martinez Bastida and Dave Griffin explain the changes that will have the most impact for private markets and AIFMs.  

Although still at the proposal stage, the Market Integration Package demonstrates the EU’s ambition to streamline its regulatory architecture. The reforms must now be reviewed and agreed by both the European Parliament and the Council, and – once adopted – would generally apply 12 to 24 months after entering into force. However, while substantial changes are unlikely before 2027, we’ve highlighted five things which we believe are relevant for private markets to consider today.  

1. A more harmonized cross-border marketing regime for EU AIFMs

The proposed reforms directly tackle longstanding inconsistencies in how member states interpret and enforce the Alternative Investment Fund Management Directive (AIFMD) marketing rules. Supervisory practices currently vary widely, with different requirements for the content and format of promotional materials and higher costs for funds marketed in several jurisdictions. 

The Commission aims to address this by: 

• Removing marketing and pre-marketing rules from AIFMD and transferring them into the Cross-Border Distribution of Funds Regulation, which applies directly and eliminates national discretion  
• Shortening notification and de-notification processing timelines 
• Mandating a European Securities and Markets Authority (ESMA) review of member state fees and charges linked to marketing
• Eliminating restrictive pre-marketing rules, such as:
  • the 18-month rule linking pre-marketing to deemed marketing
  • the 36-month cooling off period after de-notification

For private markets, where blind pool AIFs often depend on long, phased fundraising periods, these changes materially reduce friction and improve cross-border fundraising certainty. 

What it means: In theory there is a single market for financial services throughout the EU member states, but in practice AIFMs find themselves having to navigate a patchwork of jurisdictional-specific requirements for each border they cross. These regulatory hurdles add complexity and cost to marketing a fund in the EU and even influence decisions around which pools of capital in which countries to approach. Removing these hurdles is a step in the right direction of a true single market, and should improve the fundraising potential of the EU. 

2. A New ESMA mandate over marketing communications

Marketing communication standards have historically been challenging for private markets, particularly where fund structures make “past performance” and “forward looking” disclosures difficult. 

The Commission addresses this by requiring ESMA to produce a delegated act covering: 

• What constitutes a marketing communication; 
• Principles of information that is fair, clear, and not misleading; 
• How risks, costs, fees and performance should be presented; and 
• Standard drafting expectations. 

Crucially, the file highlights that the Package will shape how communication rules interact with blind pool private funds, where current rules “do not work very well”. This could lead to more realistic, tailored requirements for private markets strategies. 

What it means: This change should be a real boost for private markets. By giving ESMA a clear mandate to set consistent marketing standards, the rules can finally reflect how blind pool strategies work in practice. It should bring much needed clarity, reduce unhelpful constraints, and help managers communicate in a way that is both compliant and meaningful for investors.

3. A more flexible delegation framework for AIFMs

Delegation — particularly intragroup delegation — is fundamental to private markets operating models. Today, group entities must satisfy the same oversight tests as third party delegates.

The Package proposes to: 

• Disapply certain due diligence and monitoring obligations when the AIFM delegates functions to an EU group entity; 
• Require only simple notification, not full assessment, for intragroup delegation; and 
• Retain the letterbox prohibition and ensure AIFMs remain fully liable for delegated functions.

This is one of the most commercially significant reforms for private markets, enabling more efficient use of group resources while maintaining regulatory safeguards.

What it means: Intragroup delegation has always been far safer and more transparent than outsourcing to external providers, because group entities operate under aligned governance, culture and controls. By simplifying the requirements for EU group delegations while keeping the letterbox prohibition and full AIFM liability, the Commission is recognising this reality. It allows AIFMs to use their internal expertise more efficiently without weakening investor protection. 

4. Depo Lite availability across the EU and a new depositary passport

Private markets funds, especially closed ended AIFs, have historically relied on depositaries established and regulated in the jurisdiction of the fund, which was mandated by the AIFMD. This is why the markets for depositaries in the larger funds jurisdictions of Luxembourg and Ireland have grown and matured, whereas other jurisdictions have fewer depositaries of scale as well as less choice. 

The file outlines two changes that may reshape this landscape: 

1. Depo Lite models – for closed ended AIFs, member states will no longer have discretion to prohibit Depo Lite arrangements 

2. Depositary passporting – AIFs will be allowed to appoint a depositary located in another member state, provided it is a Markets in Financial Investments Directive (MiFID) investment firm or credit institution authorized to operate cross-border. 

This potentially increases optionality for AIFMs and could gradually diversify depositary markets outside established hubs, though entrenched practices in Luxembourg and Ireland are likely to limit quick shifts.

What it means: This potential opening up of the depositary provider market should offer more choice for fund managers when making appointments and in managing the performance of depositaries. This, in turn, could put downward pressure on fees and/or upward pressure on performance expectations and represent a real shake-up of the depositary market. However, with an ever-increasing focus on regulatory compliance and an expectation that service providers continue to invest in tech-enabled delivery platforms, are institutional fund managers and their investors going to look beyond established providers in established jurisdictions in search of a potential minimal cost saving? It is unlikely, at least in the short term.  

5. New supervisory dynamics for large AIFM groups

For large private markets groups operating across several member states, supervisory fragmentation can create operational inefficiencies. 

The proposed reforms introduce: 

• ESMA-led annual reviews of supervisory approaches for groups with >EUR 300bn AUM and multi-jurisdictional AIFMs; 
• Identification of diverging, duplicative or inconsistent supervisory practices; and 
• Recommendations to national regulators to harmonise oversight. 

This is not direct ESMA supervision, but a new layer of supervisory coordination aimed at eliminating cross-border inconsistencies impacting large private markets platforms. 

What it means: For large private markets platforms, this is a very welcome development. Intra-EU supervisory divergence has long created duplicate expectations, parallel requests and unnecessary friction. ESMA’s new coordination role won’t replace national supervision, but it will help align approaches and remove inconsistencies across member states. That makes the system safer and more predictable and ultimately allows large AIFM groups to focus more on running their businesses and less on navigating differing supervisory interpretations. 

The proposed outcome

While the Market Integration Package does not fundamentally reshape AIFMD, which remains the central framework for private markets in the EU, it introduces significant, focused amendments to key areas of the regime.

In summary, the reforms would support:

• Smoother cross-border distribution; 
• Clearer and more proportionate marketing rules; 
• More efficient intragroup operating models; 
• Greater flexibility in depositary arrangements; and 
• Improved supervisory convergence. 

For AIFMs and private markets sponsors, these changes could reduce the administrative burden and improve operational scalability, provided regulators apply the new tools in a pragmatic and harmonized manner. 

Aztec will continue monitoring the evolution of the proposals as they move through the legislative process. If you’d like to discuss any of the proposed changes, please contact us.

In our latest episode of the Alternative Insights podcast, Pete Blackburn, Director, Global Client Relationship Lead – Real Assets, is joined by special guest Zahl Limbuwala, Partner at DTCP (Digital Transformation Capital Partners), for a conversation that cuts through the noise surrounding data center investment.

During this episode they discuss:

• The accelerating demand for data centers and whether this exponential demand will hit a ceiling and when that might happen
• Power availability and grid constraints are becoming the biggest factors shaping location, feasibility and returns in data center investments
• The Middle East, Latin America and parts of Africa are seeing fast growth as digital infrastructure expands globally
• Technological change, especially in AI, is creating ongoing step‑change improvements, requiring investors to plan for long‑term adaptability and future-proofing.

Listen to the Alternative Insight podcast episode:

Listen to “Data Centres Unlocked: Opportunities and Challenges” on Spreaker.

If you like what you heard, head to Spotify, Apple Podcasts or wherever you listen to podcasts, find Alternative Insight podcast by the Aztec Group and hit the subscribe button, so that you receive all future episodes as soon as they’re published!

Podcast disclaimer:
This recording has been prepared by the Aztec Group and is made available by Spreaker for and on behalf of the Aztec Group for private or non-commercial use. By accessing this podcast you acknowledge that the entire content and design of the podcast are the property of the Aztec Group and are protected under applicable laws and should only be used for private or other non-commercial use. You further acknowledge that neither Spreaker nor the Aztec Group provide any warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. Information and opinions are provided for general information purposes only and do not constitute legal or other professional advice. Any reliance you place on such information is strictly at your own risk. For full details please click here.

Investors are taking a more active role in how their capital is deployed and one of the ways they are doing it effectively is through co-investments and direct investments. For GPs it is a potential boon as it builds stronger bonds with LPs and offers other avenues to raise capital. Matt Horton and Neil Dexter Tuyan explore this trend’s benefits and challenges.

As fundraising remains constrained, private markets continue to evolve to unlock capital. Among the trends is a growing appetite for co-investments and direct investments. This is largely being driven by Limited Partners’ (LPs) desire for more control, transparency and cost efficiency in a tough investment market. It is a valuable tool for LPs to manage exit pacing and express market views, especially during market slowdowns.

Goldman Sachs’ 2024 Private Market Diagnostic Survey found that 50% of LPs now actively allocate to co-investments, an increase from previous years. Furthermore, an Adams Street Partners 2025 survey noted that 88% of LPs plan to increase their co-investment allocations.

Research shows that many co-investment deals have historically outperformed their parent funds, and some large institutional investors, like the California State Teachers’ Retirement System (CalSTRS) for example, have reported significantly higher IRRs on co-investments compared to their private equity fund commitments. For GPs too there are benefits as they can secure additional funding, which allows them to pursue larger deals without exceeding concentration limits, and co-investing allows GPs to build stronger bonds with LPs.

Though these co-investment or direct investment opportunities offer many benefits for LPs, they can also introduce operational complexities for GPs.

Why are LPs increasing their interest in co-investments and direct deals?

This shift reflects a broader private markets trend among LPs toward active portfolio management and closer alignment with GPs. Some of the benefits investors are looking for include fee reduction as co-investments often come with reduced or no management fees and carried interest, improving returns overall. These deals also give LPs a greater influence over investment decisions, timing and exit strategies, especially important in a sluggish market where GPs are competing for capital and so are more likely to offer compelling co-investment deals. There’s also the enhanced transparency that comes with these deals, giving LPs access to deal-level data so they can more directly assess performance and risk.

What are the benefits and challenges of these investments?

The benefits are:

• Lower fee structure: Co-investments typically come with reduced management fees and carried interest compared to traditional fund commitments, sometimes waiving traditional fees entirely. This improves net returns for investors, making the deal more attractive and aligning interests toward performance rather than fee generation
• Enhanced investor alignment: Investors gain greater transparency into the underlying asset, deal terms, and strategy. They share direct exposure to the same risks and rewards as the GP, fostering trust and partnership. Alignment is strengthened because both parties are invested in the success of the same asset
• Portfolio customization: LPs can select specific deals that match their risk appetite, sector preferences, or ESG goals. This flexibility allows investors to tilt their portfolio toward desired outcomes without committing to an entire blind pool
• Accelerated deployment and diversification: Co-investments help LPs deploy capital faster and diversify across sectors or geographies without waiting for fund cycles. This can improve risk-adjusted returns and reduce concentration risk
• Stronger GP-LP relationships: Offering co-investments signals collaboration and trust from the GP. LPs often view this as a sign of access to high-quality deals, strengthening long-term partnerships
• Potential for higher returns: Because co-investments often involve top-performing assets and lower fees, they can boost overall portfolio performance. LPs also gain insight into GP’s deal-making capabilities, which informs future commitments.

Potential challenges are:

• Adverse selection: LPs need to be wary of adverse selection, as the best deals may not always be available to them. A high-quality co-investment evaluation process is critical
• Risk of misalignment: There is a risk that LPs making large co-investments could undermine the traditional GP-LP relationship, especially if they are primarily using the fund commitment to access direct deals
• Operational burden: While some LPs rely on their own teams, others use specialized third-party advisors to manage the complexity and the constant need for market intelligence and GP relationships associated with co-investing.

What are co-investments and direct investments?

There are different types of investments LPs can make alongside GPs, and in essence all of them deliver the same outcome for the LPs, more control and deal transparency. A GP stake is a specific type of direct investment strategy used by institutional and high-net-worth investors to gain exposure to the economics of running an asset management firm.

What are the operational complexities these deals create?

Co-investments and direct deals introduce challenges that can strain traditional fund operations, among them are ensuring equitable access to co-investment opportunities across LPs, which requires clear policies and transparent processes. There is also the need for granular reporting which includes performance data and demands sophisticated reporting systems and real-time data access. Added to this is the need for valuation consistency so that methodologies used across bespoke structures are audit-ready and build investor trust.

How can fund administrators help reduce complexity?

Fund administrators play a pivotal role in enabling scalable co-investment platforms. By leveraging their technology and expertise, administrators can help GPs and LPs focus on value creation rather than operational burden.

Support areas include:

• SPV setup and management: Rapid formation and administration of Special Purpose Vehicles (SPVs) tailored to each deal
• Data transparency: Centralized dashboards and investor portals that provide real-time access to deal metrics, capital flows, and performance
• Audit readiness: Standardised processes for valuation, reporting, and compliance that reduce friction during audits and investor reviews.

Third-party service providers can also advise firms on best practice governance models that balance flexibility with control to ensure all LPs get fair treatment, mitigating risk and fostering deeper GP-LP partnerships.

Among these models are:

• Pre-approved co-investment pools: LPs commit capital upfront, streamlining execution and reducing allocation delays
• Tiered access models: LPs are segmented based on strategic alignment, ticket size, or relationship depth, ensuring fair and transparent access
• Dedicated co-investment committees: These bodies oversee deal selection, allocation, and conflicts of interest, enhancing credibility and trust.

LPs are asking more detailed questions of their investment managers, and they want to take a more active role in the investment decisions as well as keep a closer eye on performance, efficiencies and costs, so the uptick in co-investment and direct investment will continue.

Many institutional investors plan to allocate a significant portion of their portfolios to co-investments in the coming years, with some projecting up to 20% over the next five years. For GPs too to compete in a market where capital is becoming scarcer and distributions are slowing, co-investment opportunities can incentivise LPs to invest and it helps them build goodwill and long-term partnerships with existing and prospective LPs.

You can listen to a podcast on this topic here, featuring Ben Cocoracchio, Partner at Addleshaw Goddard, and Christiaan de Lint, Managing Partner at Headway Capital Partners.

If you’d like to discuss any of the points raised here, please contact us directly.

As firms compete for capital, the GP-LP dynamic is evolving into a much more interactive, investor-led experience, say Aztec Group’s Maria von Oldenskiöld and Scott Kraemer.

In the face of challenging fundraising conditions and heightened competition across private markets, the relationship between investors and fund managers is being reshaped. LPs aren’t just supplying capital – they are actively influencing how partnerships unfold, from investment decisions to the way funds operate. This means GPs are upping their game, responding with more transparency, customized options and genuine collaboration. As Aztec Group’s Maria von Oldenskiöld, group head of investor services, and Scott Kraemer, head of US markets, point out, the GP-LP dynamic is evolving into a much more interactive, investor-led experience.

Q: How is the current fundraising environment impacting the LP/GP relationship?

Maria von Oldenskiöld: The scarcity of easy funding has upended the traditional power dynamic, compelling GPs to reinvent themselves, not merely to survive but to stand out. GPs now routinely offer exclusive access to off-market dealflow, invite LPs into the investment process through advisory boards and embrace new technologies for transparency and real-time reporting. The rise of co-investment is just one piece of this puzzle: GPs use it to showcase select deals, offering LPs privileged opportunities and, in some cases, accelerated returns. In essence, GPs are becoming more entrepreneurial, tailoring their approach to each investor. It’s not just about terms – it’s about forging relationships that feel strategic, innovative and personal.

Scott Kraemer: On the flip side, LPs are now firmly in the driving seat, wielding unprecedented influence over how funds are set up and managed. With a glut of options and leverage firmly in their favor, LPs are no longer passive contributors – they’re active architects of their own investment experience.

Q: What does AI mean for the investor experience?

MvO: AI stands to be a gamechanger in the investor experience, unlocking new horizons for efficiency, insight and personalization. Automated data aggregation, intelligent reporting and advanced compliance monitoring can streamline operational burdens, giving investors faster, clearer access to everything from portfolio analytics to regulatory updates. Predictive tools can help anticipate risks and opportunities, and AI-driven dashboards provide up-to-date, actionable information, all tailored to the investor’s needs.

But as much as we embrace these technologies, we must not lose sight of the irreplaceable human touch. Trust is built through relationships. While AI can surface insights and automate the routine, it is our people who understand context, offer nuanced advice and respond to the unique complexities of each investor’s journey. Human judgment, empathy and problem-solving are vital – especially when the unexpected occurs or bespoke solutions are required. In this future, AI will be the tireless assistant; the humans, the trusted advisors.

SK: I view AI as an enabler – empowering both administrators and investors to work smarter, not just faster. AI can automate repetitive tasks, support real-time data queries and reduce friction in reporting and document processing. Imagine investors being able to access up-to-the-minute updates on transactions, filter data for their oversight needs and even receive proactive alerts when milestones are reached – all through intuitive platforms.

Yet, automation is just one piece of the puzzle. The real value emerges when AI-driven efficiency frees up our teams to focus on what matters most: collaboration, personalization and service excellence. Human insight remains essential for interpreting complex scenarios, navigating cross-border regulatory challenges and delivering the bespoke support investors expect. Technology and people together create a partnership – AI handles the heavy lifting, while expert teams ensure investors feel heard, valued and fully supported at every stage of the investment lifecycle. The future lies in balancing the best of both worlds. The proliferation of side letters is evidence of this shift: LPs secure bespoke terms covering everything from ESG integration to fee breaks and priority reporting, ensuring their unique requirements are front and center.

They’re also shaping the agenda on governance, risk and portfolio construction, often insisting on more frequent interaction and accountability. This has led to a culture of negotiation, where LPs expect – and get – custom solutions tailored to their institutional mandates.

Q: How has the evolving LP/GP relationship impacted the investor experience?

MvO: Today’s LPs come with clear-cut expectations, seeking an experience that’s smooth and efficient from start to finish. They look for quick, intuitive and largely automated processes, with as little paperwork and repetition as possible. Immediate access to information is expected as standard; LPs want secure online portals that let them retrieve reports, check dashboards and obtain critical documents instantly – sidestepping the holdups linked to more traditional systems.

Consistency and dependability in reporting is crucial. Regular updates in familiar, industry-standard formats such as ILPA are now the norm, making comparisons straightforward and avoiding the annoyance of inconsistent or overly tailored presentations. Beneath all this sits an unwavering focus on security and privacy, with strong controls and clear audit trails in place, so that LPs’ data and every point of interaction remains fully safeguarded throughout their journey.

Ultimately, LPs measure their experience by how efficiently they receive answers and insights, and by how little time is wasted on administrative friction.

SK: Beyond day-to-day ease, LPs are looking for real transparency and a genuine sense of involvement. They want to know they can log in and see exactly where things stand, with no surprises. Platforms must enable them to track fund events, monitor changes and review all relevant information whenever they choose.

In terms of ease, offering a single platform with one log-in where LPs interact with the manager over the entire lifespan of an investment – from looking for information during fundraising, to signing an electronic subscription document, through to exiting their investment – is essential. LPs want the execution of tasks, such as handoffs between the investor, the GP, the tax advisor and auditor, for instance, to be fast and clear with reduced duplication costs and limited frictions. Where possible, all parties should have access to the same information at the same time in the same way.

Q: What impact has the rise in retailization had on the LP/GP relationship?

MvO: Traditionally, GPs were accustomed to dealing with institutional LPs whose demands and expectations were well understood. However, the emergence of retail investors – drawn in by semi-liquid funds and shorter lock-in periods – has introduced a new layer of complexity. Retail capital is no longer a fringe element; it’s becoming an integral part of fundraising strategies, especially as competition for capital intensifies.

To attract and retain retail investors, GPs are now adopting semi-liquid strategies that demand operational agility. Managing these funds involves handling daily or weekly liquidity windows, complex valuation cycles and navigating an evolving regulatory landscape. Unlike closed-end structures, semi-liquid funds must support frequent subscriptions and redemptions, requiring robust systems for accurate, timely reporting and a proactive approach to compliance.

Moreover, GPs face the significant task of scaling anti-money laundering and know-your-customer checks, addressing a wide array of tax regimes, and maintaining clear, responsive communication with a broader investor base. As a result, GPs are investing heavily in digital infrastructure and client service functions to deliver a seamless, consumer-grade experience – recognizing that retail investors expect the same speed and convenience they receive from other segments of the financial industry.

SK: From the LP perspective, the arrival of retailization is transformative, but it’s not simply a shift towards greater transparency and digital access. For institutional LPs, the process has always been defined by formal structures – quarterly reporting, scheduled meetings and a focus on long-term partnership and governance. Their involvement is strategic, with a premium placed on stability, clarity and predictable engagement across the fund’s lifecycle.

Retail investors, however, bring entirely different priorities. Their expectations are shaped by their experiences as consumers: they demand immediate access to information, frictionless transactions and the ability to interact with their investments on their own terms. They are less interested in periodic meetings and more concerned with being able to track performance, make decisions, or request redemptions in real time, often via intuitive digital platforms.

The net effect is that GPs are now required to cater to two distinct investor profiles. Institutional LPs still expect rigor and structure, while retail LPs prioritize flexibility, accessibility and ongoing engagement. Success for GPs lies in balancing these divergent needs without compromising the quality of service for either group.

Q: How can fund administrators help GPs meet rising LP expectations?

MvO: The evolving expectations of LPs are fundamentally reshaping the investor experience, with fund administrators at the forefront of this transformation. Administrators have moved beyond traditional models and are now actively investing in the LP journey – viewing investors as key stakeholders rather than passive recipients. This means building specialist teams that focus on servicing investors, implementing technology that enables real-time access to fund information and supporting LPs with tools to monitor events, review documents and participate meaningfully in operational matters.

The goal is to create a seamless end-to-end journey, from onboarding to exit, where all parties have simultaneous access to information, duplication is minimized, and the process is as frictionless as possible.

SK: We’re seeing a clear shift towards treating LPs as the clients’ client, prompting administrators to reimagine the investor experience from the ground up. The focus is on simplification and control: LPs are provided with a single, secure platform to interact with the manager throughout the investment lifecycle, whether it’s fundraising, onboarding or managing exits. Tasks that previously involved multiple handoffs are now streamlined and clarified, with reduced duplication and fast execution.

Crucially, GPs increasingly expect fund administrators to accommodate tailored governance arrangements and bespoke LPA provisions for cornerstone LPs. Furthermore, administrators are relied upon to manage the complexity that comes with a global investor base – this includes overseeing diverse regulatory reporting obligations, deploying blocker structures and addressing jurisdiction-specific requirements.

On the reporting side, the shift is towards flexibility and immediacy. LPs expect to filter, analyze and download data in ways that suit their oversight needs. This is supported by intuitive digital dashboards and specialist support teams, so LPs always feel informed, involved and empowered to participate as much – or as little – as they choose.

If you have additional questions that aren’t covered or simply want to discuss a topic raised, please contact us.

As the CFO role con­tinues to take an in­creasingly strategic shape, the issues tak­ing up CFO time and focus are also chang­ing. Once preoccupied with challenges such as compliance with changing US Securities and Exchange Commission rules, the war for talent and cybersecu­rity risks and data silos, today’s CFO is attuned to a new raft of priorities un­derpinned by macroeconomic uncer­tainty and fast-moving technological innovation.

CFOs are searching for new sources of capital and assessing the fund struc­tures and infrastructure required to channel them. They are also keeping their finger on the pulse of advances in artificial intelligence, which is forc­ing CFOs to rapidly rethink how they operate across functions, and critically, how they manage data.

All this comes through strongly in our Private Funds CFO Insights Survey 2026, conducted in partnership with Aztec Group. Only 8 percent of CFOs are yet to explore AI, with 29 percent in the early exploration or research phase, 36 percent piloting use cases and 25 percent actively implementing AI strategies. Just 2 percent say AI is embedded and no respondents felt they were lead­ing with AI innovation, highlighting why this is such a potential growth area. Finance chiefs are looking for un­expected policy announcements that might impact the industry, while keep­ing an eye on liquidity and exit oppor­tunities. In the US, macro uncertainty and regulatory change present some challenges, says John Stephens, CFO at secondaries firm Pomona Capital.

He points to the Outbound Investment Rule issued by the US Treasury in November 2024, which restricts US companies from investing in certain technology sectors in China. “That may affect some GPs more than others. Tariffs – which seem to change frequently – are another source of uncertainty.”

Announcement of the first raft of tariffs in April, “was a massive shock in­itially,” agrees Ore Adegbotolu, head of commercial, US, at Aztec Group. “For GPs with portfolio companies that had supply chain exposure to jurisdictions heavily impacted by tariffs, valuations will be a problem.” However, Adegbotolu says most GPs are adjusting to the volatility. “It’s the cost of doing business today. Shocks have become normalized as a policy is rolled out and refined or met with legal challenge and reshaped. Managers are still fundraising – albeit at lower levels than seen in 2022-23 – and those that are successful have accepted that there’s going to be some noise.”

LPs under pressure

For Tony Braddock, CFO at New York- based Stellex Capital Management, which is currently targeting $2.5 billion for its third flagship vehicle, “middle market fundraising doesn’t strike me as being particularly differently challeng­ing from what it was, let’s say, five or 10 years ago. Our strategy continues to resonate with some prospective LPs. It doesn’t with others due to timing and other factors.”

However, Braddock notes that the GP is consciously trying to diversify its LP base. “From Fund I our investor base grew 50 percent in Fund II and it’s probably going to grow another 50 per­ cent in Fund III,” he says. “At the same time, we’ve been fighting the same bat­tle every GPs is: trying to generate li­quidity for our LPs. Across the market, some LPs have been very smart and for­ward-thinking and taken the initiative by executing secondary transactions to help free up capital and to get past be­ing stuck in a relationship.” “LPs have been under a lot of pres­sure,” agrees Stephens.

“Liquidity is lower than what it was several years ago. Portfolios are no longer self-funding as they once were. Public equity volatility affects how LPs think about allocations too. It’s a more challenging environ­ment for them. And if you’re a large [US] endowment, the prospect of a new tax on equity earnings adds another lay­er of complexity. All this translates into a more challenging fundraising envi­ronment for many GPs, and opportu­nity for secondary buyers.

“Some GPs have responded by extending their fundraising periods. Others are completing a few investments during their fundraising process, which can benefit LPs by providing an early look at how a sponsor’s portfolio is developing.”

For some mid-market managers, fundraising never stops, notes Adegbotolu. “Of the firms we work with, even after they’ve reached final close, some of them are still keeping their fundrais­ing feelers out there.”

Among Aztec’s clients, some firms are exploring new frontiers as they expand their addressable investor pool and hunt for more capital. They are getting educated around navigating the European market in a more fulsome fashion, and also Asia, specifically Japan and Korea. Our clients are also opening up in the Middle East. An outsourcing partner can help chaperone a manag­er through new markets to help them overcome regulatory hurdles and oper­ate safely.”

Channeling private wealth

Another increasingly appealing and possible option is to tap into the grow­ing interest from high-net-worth and retail investors in private markets. How to accommodate their specific needs, including liquidity and reporting, is top of mind for many CFOs.

HarbourVest sits among the very large firms leading the charge. In July, the firm appointed its first head of glob­al private wealth to focus solely on this segment and has already launched a handful of evergreen solutions. “We’re really trying to expand access to more investors in the US,” says Peter Ma­honey, HarbourVest Partners’ head of investment accounting. “From Luxembourg, we’ve started to expand access to this segment in Europe too. Private wealth is certainly a big strategy for us moving forward.”

Down the scale, “there’s definitely appetite to explore the variety of ‘re­tailish’ structures,” says Adegbotolu. “Moving from chasing a few institu­tional managers to onboarding hun­dreds of investors, there’s all manner of supporting infrastructure that you need to have in place. That’s where partner­ships with broker-dealers and banks could provide a channel for mid-mar­ket firms, through feeder vehicles as an example. These institutions are looking beyond large managers to mid-market GPs with niche appeal and a solid prod­uct who they can offer to customers through their platform.”

However, for mid-market firms, “a significant barrier to entry is the regu­latory infrastructure they need to put in place, coupled with their lack of brand penetration in that space compared to mega-managers,” Adegbotolu says. “How can mid-market firms establish breadth and penetration? Larger man­agers are going to drive the direction of this market. We’re not seeing that many, if any, mid-market managers suc­cessfully execute on this.”

“Most of us in the middle market are still establishing that brand and track record,” says Braddock. “From a fundraising perspective, the question is, how do we raise capital through what is a competing channel? The potential conflicts of interest that arise from that seem to be very, very difficult to navigate.”

And all the while, meeting these additional regulatory and product ob­ligations is seemingly growing more complex. Mahoney notes that “valua­tions are certainly interesting because there’s a requirement for monthly val­uations [of the fund] and that timeline could shrink further. The public world of mutual funds and private markets are moving much closer together.”

About a decade ago, Pomona launched a 40 Act fund targeting mass affluent investors and has steadily scaled that business over time, says Stephens. “Brand recognition, infrastructure and distribution are all critical, and there are operational challenges involved in op­erating a 40 Act business that are very different than those faced in managing funds for institutional investors.”

However, attracting retail capital is not simply about operational capabil­ities, he notes. “Retail investors invest with similar return discipline as institu­tional investors. If returns aren’t there, they won’t invest.”

Continuing on

While the quest for new investors con­tinues, in the absence of an active exit market, GPs are also exploring new sources of liquidity. Notable among them is the rising use of continuation vehicles. However, deploying such structures comes with its own set of challenges and considerations for to­day’s CFO.

In April 2024, Stellex closed a single- asset continuation vehicle that acquired the assets of Fenix Parts, an automotive parts recycler and reseller, which the firm acquired in 2018.“From the day we underwrote the asset, we told our LPs our plan and explained there would be a growth phase post-investment, and we couldn’t wait to get to that phase,” Braddock says. “[Having launched a continuation fund] now we’re part of that growth phase.

“Even though the transaction had the characteristics of a typical ‘crown jewel’ GP-led investment, it came with its challenges. LPs have different needs and sensitivities. We had a straightfor­ward story, but we still had to explain our reasoning to our LPs and reassure them that we were doing the CV for them.

“The big issue is, and it’s an obvious one – it’s been difficult to sell. In 2021 and 2022, you didn’t have the perfor­mance numbers. In 2023, interest rates began to rise, and valuations started to take a turn. And in 2024, there was a question mark over the economy. Looking ahead, no one knows where the economy is headed in 2026. The [exit] market will open up when it opens. People asking you to sell won’t change that.”

David Faiman joined Argand Part­ners as CFO and director of portfolio operations earlier this year. Over the last few years, in response to the tight liquidity environment, the mid-market GP considered a number of options in­cluding sales, dividends and a continu­ation vehicle, he says. Earlier this year, Argand executed a dividend recapitali­zation of one of its portfolio businesses and a special dividend on a listed port­folio company.

“Those are two nice transactions to report and returned money to investors,” says Faiman.

“Earlier this year, we also evaluated a full exit for a very strong business. There was a lot of interest, and the company had almost no tariff exposure, but Liberation Day came and the sudden new tariffs pre-occupied buyers. In another instance, Russian oil tariffs on India sidelined a business that is well placed to go to market. While we had not yet launched a process, we did hold some fireside chats. Then the next day punitive Russian oil tariffs on trade with India were announced.”

From an LP perspective, there has been pressure to sell, Faiman notes. “These are very good assets, but we’re happy to hold them until there’s an opportunity where it makes sense to sell. LP pressure abates when you explain it. “We’ve continued to support the portfolio with add-on acquisitions, and we have found strong support for investments outside the fund, including our recent purchase of [dancewear designers and manufacturers] Capezio.”

Faiman concedes that it’s a tough environment to fundraise, and long hold periods deplete IRR. “But I don’t know that that’s enough of a reason to sell. We are very focused on generating a strong MOIC,” he says. “It’s tough. If you asked 10 people on the street, when will the market normalize? I think you’ll get 10 different answers.”

From a secondaries investor perspective, “we take a highly granular, asset-centric view of GP-led opportunities,” says Stephens. “We conduct an LBO analysis on companies to determine if we’re comfortable with our entry valuations and to confirm we can invest behind their growth and exit story. For LPs with smaller teams, this effort can be challenging. Alongside concern about conflicts and valuations, limited bandwidth also may contribute to a natural cautiousness LPs may feel when responding to GP-led proposals in their portfolios.”

Mahoney agrees: “It’s resource intensive, it takes a lot of due diligence, and internal debate to get there. There’s a whole process built around reassessing the assets to ensure they align with our strategy.”

While firms grapple with constrained liquidity, CFOs have also been tasked with overseeing the launch of entirely new strategies. “Over the next few years, the product pipeline we all share is exciting,” says Mahoney. This summer, building on its established credit business, HarbourVest launched a new credit secondaries platform that will acquire interests in GP- and LP-led processes. Braddock can see an opportunity for credit secondaries created by ambitious mid-market managers that have expanded into the private credit space only to realize it has a very different investment profile, but would be willing to sell.

Lauren Dillard, CFO at Austin based enterprise software specialists Vista Equity Partners, notes that the firm’s credit platform typically lends to businesses with profiles similar to its equity investments, but is open to strategic financing alternatives.

“Vista Credit Partners focuses on direct lending and structured finance solutions for later-stage software companies, which fits naturally with our expertise and leverages the full strength of our ecosystem,” she says. “Not only can we originate, underwrite and lend to these businesses at a quantum and structure aligned with their growth stage, but we can also provide light touch operational support through our value creation team.”

The evolution of the credit space is just one example of the creativity and complexity indicative of a maturing industry. “Since the financial crisis, there’s been a number of smaller crises and the industry has evolved and innovated and found new ways to make money and create value,” says Adegbotolu. “The industry has become more resilient.” In turn, so has to be today’s private fund CFO.

If you have additional questions that aren’t covered or simply want to discuss a topic raised, please contact us.

It’s that time of year when James Gow explores the 10 themes managers need to navigate as we head towards 2026. For private markets, 2025 was a year of innovation and recalibration – despite a punishing fundraising environment heightened by ongoing macroeconomic tensions, there are signs that safe harbor may be in sight.

It has been another demanding year, with private markets remaining slow for many. In last year’s article, I drew comparisons to the classic struggle between Nemesis and hubris, capturing the industry’s ongoing challenges and opportunities. This year, inspired by Homer’s The Odyssey, we look to Odysseus’ journey through uncertainty and obstacles, mirroring fund managers’ efforts to steer the industry back to calmer waters. Building on last year’s insights, we now focus on the 10 themes predicted to shape private markets in 2026 and beyond.

The challenges

Global events continue to unsettle markets and societies, illustrated by interest rates in developed markets falling more slowly than originally anticipated at the start of 2025. Ongoing conflicts in Europe, the Middle East and Africa, shifting international relationships, and significant U.S. policy changes, means that securing and deploying capital remains challenging. Among these broader macroeconomic conditions is the artificial intelligence (AI) investment boom, which has boosted markets, particularly in the U.S. and has led to significant capital investment to build AI infrastructure.

Meanwhile, the overall fiscal environment has rattled investors at various points during 2025, and it’s broadly accepted that many advanced economies, including the U.S., UK and France, are on an unsustainable path. A further consideration is the fracturing of the global economy which has been exacerbated by trade uncertainty and supply chain disruption driven by U.S. tariff policies. Additionally, the increasing frequency of natural disasters has impacted investor confidence. In the first half of 2025, natural disasters exacerbated by climate change cost the U.S. $101 billion in damages, the largest toll for any first half-year since records began in 1980.

The opportunities

At our recent Leaders in Private Markets Summit in London, we conducted a snap poll of our audience comprising 200 c-suite leaders from across the industry. When asked about the biggest challenges industry leaders were facing, the top three issues raised were an over-reliance on automated decision-making (19%), cybersecurity (17%), and rising LP demands for real-time reporting (15%). Meanwhile, when asked about what excited them most, attendees overwhelmingly voted for the expectation that AI will enable teams to make faster and smarter decisions (38%), tech-driven operational efficiencies and controls (31%), and the flexibility of semi-liquid structures (28%).

Perhaps one of the unexpected benefits of a slower fundraising, exit and deal environment is that fund managers have had the time to optimize their operating models, introducing AI technologies as well as establishing which operations would be better outsourced.

LPs with available capital are increasingly adopting a hands-on approach, seeking more comprehensive information from GPs on a broader array of topics and becoming more actively involved in operational matters. The Private Funds CFO Survey found that, during RFP processes, the main topics LPs asked GPs about in detail were cybersecurity (88%), valuations (89%), and compliance (82%). This shows that investors are paying even closer attention to how managers operate.

The themes

Much like Odysseus steadfastly navigating past the Sirens in Homer’s epic, today’s fund managers must plot a clear course through distraction and uncertainty, remaining committed to future-proofing their operations to reach their intended goals. Drawing on our extensive client engagements spanning various regions, investment strategies and fund sizes, we foresee that the following 10 themes will not only persist but also further influence and redefine private markets as we journey into 2026 and towards 2030.

1. Fundraising will continue to be challenging, for some

The recent Private Funds CFO Survey, conducted by the Aztec Group in partnership with PEI, confirmed what every manager in the market knows to be true, that the fundraising environment continues to be challenging, with 4 in 10 of those surveyed stating they’ve extended their fundraising period, while 2 in 10 have adjusted their target fund size, and 2 in 10 have explored a continuation vehicle. Bucking this trend are infrastructure and private credit funds. Infrastructure fundraising rebounded in 2025 due to a small number of large fundraises in the year to date, while there’s a steady increase in year-on-year fundraising forecasts from 2026 to 2030 for both asset classes, according to Preqin.

“Among our clients we’ve observed a clear reward for those GPs who have executed a plan to return cash to investors. They are being repaid for that endeavour.” – Matt Horton, Head of Client Relationships, Private Equity

2. Semi-liquid funds will continue to grow in popularity

A Deloitte report in September 2025 stated that semi-liquid fund AUM had almost tripled, from $126 billion in 2020 to $349 billion by 2024. The number of funds surged too, from 238 to 455 in the same period. Based on this upward trend, Deloitte forecasts semi-liquid fund AUM will reach $4.1 trillion by 2030, driven by retail interest, new fund structures (including LTAFs, ELTIFs), and favourable regulations. However, this market will be dominated by large fund managers who will build complete retail propositions, while medium sized managers will offer funds with semi-liquid entry points, and smaller managers will likely not participate at all.

‘The difference between now and a year ago is that we are seeing a split in the market. Smaller managers are not building in any form of liquidity, medium-sized managers are offering semi-liquid parallel or entry points, and large/mega managers are building true retail offerings.’ – Sam Metland, Head of Products and Propositions

3. Secondaries will continue to surge

With the exit environment expected to remain challenging, GPs must continue to find alternative sources of liquidity including through continuation funds, allowing them to extend the life of their investments and provide liquidity to existing investors. In a recent article, Verdun Perry, head of secondary market funds at Blackstone Inc., said he believes that trading in existing private equity assets is an underutilised tool. He forecasts that by 2030, secondary market trading volume will more than double to reach $400 billion, and that trading in the sector could exceed $220 billion by the end of 2025. According to Preqin, AUM in the secondaries market is projected to grow at a compound annual rate exceeding 16% between 2024 and 2030, surpassing $1.4 trillion by the end of the period. Market volume has been impacted by several factors, including the lack of distributions from standard IPO and M&A pipelines which increased supply, while broader and more diverse pools of secondary capital drove demand.

“Activity across fund of funds and secondaries managers continues to increase in complexity, driven by larger portfolios, bespoke transaction structures and greater data demands. Secondaries processes in particular now operate on compressed timelines and require deeper visibility into layered underlying asset information.” – Metz Vara, Global Head of Fund of Funds and LP Services

4. GP/LP relationships will deepen

According to respondents of the Private Funds CFO Survey, LPs’ most frequent questions to GPs focus on fund performance and benchmarking (75%), as well as transparency around fees (43%). Meanwhile, Bain’s latest global private equity report notes that 70% of LPs are now pursuing co-investment opportunities with GPs, while McKinsey found that 30% of LPs are participating in strategic partnerships or separate accounts structured to allow for deeper engagement with GPs. What these findings signal is a shift beyond traditional, passive investment roles to more active participation by LPs in deal selection, governance, and value creation. The Survey also revealed what GPs think LPs value, the top answers were: timely and accurate reporting (72%), followed by responsive, high-touch investor relations (69%). Third was confidence in strong controls and governance (35%), while smooth onboarding (21%) and easy access to data (21%) were also important to LPs. So, it’s not just about the numbers, it’s about making the investor experience seamless.

5. Operating models will continue to evolve

Facing increasing pressure on returns, GPs are expected to maintain a sharp focus on cost management and operational efficiency, frequently reviewing and adapting their operating models. Maximising outsourcing arrangements across all business functions has become a key strategy, and more innovative fee models are emerging as firms compete for investor capital. As fund managers consider whether to keep processes in-house or outsource to maintain a stable cost base, they must also respond to growing investor demands and more prescriptive regulatory requirements. The importance of selecting the right outsourcing partner is reflected in the Private Fund CFO Survey, which found that timely and accurate reporting (72%), responsive client service (69%), cost and fee structures (27%), and technology and data capabilities (21%) are the top priorities for GPs, showing that efficiency and service quality are as crucial as ever in a rapidly evolving private markets landscape.

“The need for managers to continuously assess and adapt their operating models with a focus on resilience, scalability, and investor experience is not a new concept. However given market evolution, what is changing is the ‘how’ and the speed of execution – which includes the use of new tech and working creatively with strong, nimble delivery partners.” – Akbar Sheriff, Chief Client Success Officer

6. Leveraging data, AI and automation is a necessity

Volatile macro-economic factors present operational challenges for fund managers. Several clients have asked for our help to support their data and AI strategies to get ahead of those operational challenges, whether sharing insights from our own data, AI and automation journey, or through the provision of quality data served by our industry-leading data platform. Our CFO Survey found only a quarter of firms are actively implementing AI, while a mere 2% said they’d fully embedded it. Most fund managers were either in the early exploration phase (29%) or piloting use cases (36%), and among those exploring or using it, 75% said they were buying in the technology from third parties.

“Leveraging data, AI and automation to augment deep human expertise is moving beyond differentiation, it is becoming a necessity to operate and scale in an increasingly unpredictable market.” – Will Relf, Director of Data

7. Global regulations and digitization will step up

The direction of travel globally is towards more regulation of private markets, not less. This is especially true as the alternatives industry opens up to a more diverse group of investors, with regulators moving to provide comprehensive protections. While the U.S. market has experienced some regulatory loosening under the current administration, there are still many regulatory changes that require careful attention, such as the upcoming changes to the ADV Form. In other jurisdictions regulations are tightening, and for globally active managers, this is an area that will continue to require close attention. Within the EU there is already increasing oversight of how sustainability is measured and reported, as well as how the crypto-asset landscape is regulated. As digital assets become more mainstream, regulation will follow to protect investors. Digital assets are rapidly becoming an essential part of the investment mix, providing opportunities – and potential risks – for jurisdictions, regulators, fund managers and investors.

8. Investors will choose size for security

CFOs have told us that the consolidation trend among GPs continues, with almost four in five expecting some or high levels of consolidation in the future. We anticipate this trend to continue, with bigger managers potentially seen as a safer bet by many investors. Based on our experience with a broad range of clients we expect that, as the market matures, managers will continue to consolidate, driving the emergence of ‘mega’ global asset managers. And as the industry expands into new sources of private finance, such as credit and infrastructure, managers are identifying opportunities to deploy capital into new assets in new locations.

“In terms of deal flow too, managers are looking at returns differently and taking a thematic approach to selecting companies,” Maria von Oldenskiold, Global Head of Investor Services

9. Private credit’s boom will be stress-tested

Morgan Stanley’s 2025 Private Credit Outlook noted that the credit market had expanded to $1.5 trillion at the start of last year, up from $1 trillion in 2020, and is estimated to soar to $2.6 trillion by 2029. This trend is fuelled by tighter bank lending, with borrowers looking for the speed, certainty and flexibility of private credit solutions. However, there are some stress-tests in store for this asset class, especially following the recent high-profile collapses of Tricolor and First Brands. Regulators are likely to demand more transparency, leverage controls and data collection to identify systemic vulnerabilities early, particularly around semi-liquid vehicles and valuation opacity, according to the International Monetary Fund. Pitchbook also notes that maturing PIK-heavy loans and stressed portfolios may pressure credit managers to raise capital, restructure or liquidate assets, especially if interest rates don’t come down. Under stress, private credit could undergo a valuation reset. However, Morgan Stanley’s report notes more opportunity in asset-based finance as well as growth companies needing hybrid finance and real estate funding.

“Private credit investors are also becoming more mainstream and include wealth management platforms, pension funds and insurance companies. These institutional LPs are more demanding, and regulatory bodies too are turning their attention to private credit, mandating transparency, and clarity as the asset class expands in size and scope.” Kevin Hogan, Global Head of Private Credit

10. Risk management and cybersecurity are top of mind

Cybersecurity is a priority across the industry and particularly for the LP population. When asked how detailed LPs’ questions are of operational functions during due diligence, 9 out of 10 of CFOs surveyed said that questions around cybersecurity were either ‘very’ or ‘somewhat’ detailed. The QBE Private Equity Cyber Survey (2025) found that more than 50% of private equity firms incorporate regulatory compliance and supply chain cybersecurity assessments in their pre-investment reviews, and that target companies are evaluated for cybersecurity posture as well as financials. This reflects LPs’ growing consideration of cybersecurity and risk. Another area of deep concern is the rising threats of deep fakes and AI-driven attacks. This is making it necessary for GPs and LPs to build cyber-resilience, including real-time verification and in-depth, ongoing training. LPs are prioritising cybersecurity, and GPs who are demonstrating risk management through active monitoring and response planning will be favored.

“Organisations that embed robust risk frameworks and strong cybersecurity detection and containment measures into their strategy will safeguard operations as well as strengthen trust and long-term value.” Lisa Mellor, Chief Risk Officer

Safe harbor

As we wind up 2025 and look forward to the start of the next five-year cycle leading to 2030, one thing is certain, private markets will continue to evolve to meet the diversified needs of its widening investor base. Digitisation, data management, as well as AI and automation will continue to dominate the industry’s transformation agenda, while cybersecurity concerns will rise and those who can demonstrate robust defences will prevail. Private investment in energy security and the energy transition will continue and, more globally, the build-out of data centres to power increased AI adoption may contribute to this growth. Private credit’s boom will continue too, though under growing scrutiny from regulators, who will also tighten compliance around how retail investors are treated as they increase their exposure to the private markets.

Ultimately, it was Odysseus’ perseverance and focus that eventually delivered him back to his family. In a similarly choppy market with many distractions and detractors, fund managers are best served by sticking to a strategy that sets them up for future success as the potential of safe harbor appears on the horizon. While there’s no guarantee it will be plain sailing ahead, overall the macroeconomic environment is improving for private markets and as activity increases through 2026 and beyond, the waters will become easier to navigate.

If you’d like to discuss any of the points raised here, or add a few, please contact us below.

Built in partnership between PEI and the Aztec Group, the Private Funds CFO Insights Survey 2026 examines the primary trends, opportunities, and challenges shaping CFOs’ agendas. Akbar Sheriff, Chief Client Success Officer, and Scott Kraemer, Head of US Markets, share their key insights and talking points.  

41% of CFOs have extended their fundraising period

The Survey affirms the prevailing sentiment across the private funds industry: fundraising and dealmaking continue to present significant challenges, with only 35% of respondents closing their latest flagship fund in 2025 and a mere 5% currently in the process of raising their first. This environment has prompted most managers to look ahead, with the majority planning to launch new funds within the next two years—over 64% anticipating these vehicles will be larger than previous ones. This drive towards greater scale is fuelled by robust investor demand and a strong sense of impending industry consolidation, as evidenced by 78% of respondents expecting increased M&A activity among fund managers in the coming year.

Key obstacles cited include difficulties in finding new investors and delivering liquidity to existing ones (both at 68%), sustaining performance levels (66%), and sourcing quality investment opportunities (65%). These factors are shaping a landscape where competition for capital is intensifying, and only a minority have managed to close new flagship funds. Yet, the expectation that most managers will soon return to market with larger funds underscores a strategic shift towards scale, both organically and through consolidation.

59% of managers are planning to attract more private wealth capital  

The anticipated retailization of private markets is already shaping the strategies of fund managers, promising access to a larger and more diverse investor base. According to the survey, 31% of respondents have already implemented a strategy to attract greater private wealth capital, while a further 28% plan to do so in the near future. Meanwhile, 40% indicated they are not pursuing retailization at this stage, reflecting the sentiment among some managers that they neither want nor need to tap into retail capital.

Among the primary challenges managers highlight, providing liquidity to investors stands out, with 31% citing it as a significant hurdle. Additionally, 27% pointed to the challenge of ensuring they have sufficient resources in place to accommodate an increased influx of investors.

The rising appetite for private wealth capital marks a pivotal transformation for the industry. As more managers look beyond the traditional closed-ended fund model, a new approach is taking shape—one that embraces a broader investor base and redefines established conventions. To make the most of this opportunity, managers must be ready to address the operational complexities that accompany such a shift. This includes establishing robust liquidity management frameworks, implementing frequent and accurate valuation processes, and developing the capacity to manage regular investor subscriptions and redemptions.

69% of LPs want high-touch investor relations  

Growing expectations among limited partners (LPs) are driving significant change across the industry. High-touch investor relations and granular reporting are no longer differentiators—they are now fundamental requirements. From our engagement with a wide variety of fund managers, the most effective way to meet these rising LP demands is by blending digitization with personalization. This means harnessing AI and automation to deliver greater speed and precision, without losing the personal touch that fosters trust and long-term relationships.

The Survey findings reinforce this direction: general partners (GPs) believe their LPs value clear, timely and accurate reporting above all (72%), closely followed by responsive, high-touch investor relations (69%), and having confidence in operational controls and governance (35%).

It is evident that today’s investors seek far more than just financial returns—they expect an outstanding experience and superior service throughout their involvement with fund managers. Seamless onboarding, consistent and regular reporting, and prompt access to essential information have become standard expectations rather than added extras. Consequently, managers and their administrators must deliver a holistic, highly responsive service, proactively addressing investor needs.

70% of CFOs are piloting or actively implementing AI

Private fund managers are increasingly embracing artificial intelligence (AI), with nearly 70% of CFOs surveyed either piloting or actively implementing AI solutions. Despite this clear momentum, only a small minority have fully embedded AI in their operations (2%), while others remain in the early stages of exploration. This underscores a sector in transition, eager to harness AI’s potential but still navigating the path to widespread adoption.

The current phase is defined by experimentation, as firms trial AI across deal sourcing, investment selection, and operational efficiencies such as data extraction. However, industry participants are still determining the optimal balance between technological innovation and human expertise, with many managers assessing how AI might reshape their workforce and operating models.

Key challenges to further integration include identifying practical use cases and measuring return on investment, addressing the shortage of internal expertise, and managing security and compliance risks. Data quality and implementation costs are also concerns, though to a lesser extent. Ultimately, firms that develop clear strategies, invest in skills, and ensure robust data governance will be best positioned to reap the benefits of AI as adoption accelerates across the private funds landscape.

Reporting and responsiveness top the outsourcing wish list

When it comes to selecting an outsourcing partner, managers are acutely focused on factors that safeguard both operational excellence and investor confidence. The Survey underscores a clear hierarchy of priorities: accuracy and timeliness of reporting stand head and shoulders above all else, with managers viewing these as non-negotiable for meeting the rising expectations of both their LPs and internal stakeholders.

A close second is responsive client service, reflecting the ongoing need for personal, high-touch interaction, even as technology and automation continue to reshape the landscape. Rounding out the top five are cost and fee structure, the technology platform itself and, finally, the reputation and track record of the outsourcing provider.

It is no surprise that reporting quality tops the list, particularly as fund accounting is identified as the area most likely to see an increase in outsourcing over the coming year. As private markets strive for greater transparency and responsiveness to LP demands, the ability to provide clear, accurate, and timely financial data is now seen as indispensable. The Survey results highlight that 43 out of 100 respondents intend to outsource more of their fund accounting functions in the next 12 months. This aligns with the broader industry trend towards externalizing specialist tasks.

While the list of priorities may appear predictable, there are important nuances to consider. Despite the widespread enthusiasm for AI and cutting-edge technology, fund managers remain steadfast in their belief that while responsive client service is vital, technology alone is not sufficient. Managers are just as concerned with the quality of the outcome and the support they receive as they are with the methods used to deliver it. As such, the most successful outsourcing partners will be those who blend robust technological solutions with exceptional, personalized client service.

Looking ahead

The Private Funds CFO Survey 2026 paints a picture of an industry at a crossroad, shaped by persistent fundraising difficulties, a growing appetite for scale, and the increasing influence of private wealth capital. As investor expectations rise and operational demands intensify, fund managers are embracing both technological innovation and personalized service to maintain their competitive edge. The shift towards AI adoption, enhanced reporting, and strategic outsourcing reflects a sector determined to evolve and thrive amid market uncertainty. Ultimately, those who succeed will be the ones who balance robust digital capabilities with genuine human engagement, positioning themselves for long-term growth in the ever-changing landscape of private markets.

If you’d like to discuss any of the Survey results or have additional questions, please contact us directly.

Choosing a strong depositary partner is an important component of your fund’s compliance matrix. Beyond this, the choice will feed into the overall success of your fund strategy. Linda Morsia and Martin O’Brien highlight the qualities you should be looking for before settling on a service provider.

A strong depositary partner is a strategic ally, safeguarding assets, optimizing operations, and supporting long-term growth alongside their clients. The right depositary helps fund managers navigate evolving regulations, avoid costly errors, and instils confidence among investors, which is why selecting one is of vital importance for fund managers.

What is a depositary’s duty?

A depositary serves as a guardian and overseer for fund managers, ensuring regulatory compliance and investor protection. Their responsibilities include safeguarding fund assets by confirming proper ownership for non-custodial assets like private equity and real estate, and maintaining an independent inventory. A depositary is also responsible for custody of financial instruments, such as stocks, bonds and other securities, and holds them in either physical or electronic custody.

In addition, depositaries monitor and reconcile cash flows daily to identify any discrepancies and verify that all transactions are processed in line with the fund’s guidelines. Oversight extends to ensuring managers adhere to regulations and the fund’s governing documents, covering matters such as valuations, calls and distributions, and investment restrictions.

With these duties, depositaries provide an independent layer of assurance for investors, helping to prevent fraud, mismanagement, and operational mistakes. In jurisdictions like the European Union (EU), such roles are clearly defined by legislation such as the Alternative Investment Fund Managers Directive (AIFMD), which requires depositary involvement for alternative investment funds.

What is the value-add a depositary should deliver?

Beyond the checks and balances and core services that follow, depositaries can also offer value added services such as collating and delivering market insights, and benchmarking data to help clients grow their business and adapt to changes in their operating environment. An example might be a depositary delivering regular updates to help clients make better informed decisions.

The 4 core depositary services to quality check:

1. Extensive current compliance knowledge and regulatory expertise

A good depositary must have deep and wide knowledge of local, national and global regulations. They should proactively monitor regulatory changes and inform clients accordingly. An example of this might be supporting a fund manager to transition to the Sustainable Finance Disclosure Regulation (SFDR) or navigate jurisdictional nuances for an EU member state governed by the AIFMD. A poor depositary service might expose a client to regulatory penalties and reputation damage by failing to flag non-compliance.

Questions to ask:

• Is the depositary eligible under AIFMD regulations?
• Does the depositary work alongside, though independently from, the AIFM and fund administrator?
• Is the depositary located in the same jurisdiction as the fund (or permitted under AIFMD II cross-border rules)?
• Does the depositary meet capital adequacy and prudential supervision requirements?
• Can the depositary provide Depositary Lite services for non-EU funds marketed in the EU?

2. Robust risk management

Depositaries play a key role in safeguarding assets and monitoring risk. A strong risk framework includes oversight of counterparty risk, asset verification, and escalation protocols. For example, a depositary should be able to flag unusual trading patterns in a hedge fund’s portfolio and initiate a review to uncover a rogue trader, which would prevent significant losses. An example of how incorrectly applied risk management might disadvantage a client would be if a depositary overlooked concentration risk in a fund’s holdings, which later contributed to a liquidity crisis during market volatility.

Questions to ask:

• Does the depositary have specialist expertise in private markets asset classes?
• Does the depositary have appropriate risk assessments adapted to each asset class that are flexible and client centric?
• Does the depositary understand the specialist requirements for the transaction process that applies specifically to private markets?
• Does the depositary have appropriate measures in place regarding the strict liability for loss of assets in custody?
• Are there clear terms for delegation to custodians, including due diligence and segregation of assets?
• Is there clarity on discharge of liability in case of external events or custodian/sub-custodian issues?

3. Timely and efficient operations

Efficiency in settlement, reconciliation, and reporting is a business necessity. A responsive partner can prevent delays and reduce operational risk, for example, by implementing automated reconciliation tools that reduce NAV errors, enabling faster reporting and fewer investor complaints. Conversely, manual processes might lead to unnecessary delays in trade settlement and so result in missed investment opportunities.

Does the depositary have:

• Safekeeping of assets (custody of financial instruments and verification of ownership and record for other assets)?
• Cash flow monitoring to ensure proper handling of fund transactions?
• Oversight monitoring, including NAV calculation accuracy, investor register maintenance, transaction validation, income application, and compliance with fund documentation and valuation rules?
• A proven track record and experience in depositary services?
• A strong onboarding process and transitional support?
• The specialist ability to service complex private markets fund structures (e.g., private equity, real estate, venture capital)?
• A scalable service model to support fund growth and complexity?

4. Client service and communication

In the same way as a fund manager would provide clear, proactive communication and a dedicated relationship manager to investors, the same service from a depositary can make a significant difference in how fund managers experience the service. A good example of this might be a depositary assigning a multilingual client service team to a cross-border fund, which enhances communication and reduces potential friction in onboarding and daily operations.

Questions to ask:

• Does the depositary have a dedicated relationship team with subject matter experts?
• Does it have a transparent fee structure with clarity on additional charges?
• Does it have a willingness to customize services based on fund needs?
• Does it have a strong governance culture and proactive issue resolution?

Beyond this, a depositary partner should also have a solid balance sheet and credit rating, have membership to relevant industry associations, be able to provide a range of client references and proof of low staff turnover, as well as broad experience across multi-jurisdictional operations, private markets asset classes and fund types. A modern depositary should also offer digital platforms to deliver real-time reporting, data analytics, and integration with a fund manager’s systems. It should add value, mitigate and pre-empt risk, and support your growth and goals, all while ensuring flawless regulatory compliance.

For U.S. managers, once you’ve determined you need to appoint a depositary it is important to choose a service that best fits your needs. There is estimated to be $750 billion in U.S.-promoted private capital in European centres, and U.S. managers navigating Europe’s complex and highly regulated environment need an independent third-party provider with comprehensive private markets expertise and experience to streamline the journey. For more detail about fundraising in Europe read this guide.

If you’d like more detailed information about your depositary needs or simply to discuss any of the questions raised in this article, please contact us.

In the first of our two-part Alternative Insight series on Digital Assets, Aztec Group’s Simon Ware, Product Associate Director, is joined by Design Lead at FundAdminChain and adviser to Schroders, Dr Ian Hunt, and Eran Fabian from Bite Investments, to take a deep dive into tokenization and whether it will fulfill its promise to revolutionize private markets.

During this episode they discuss:

• The evolution and impact of tokenization in private markets
• Operational and regulatory challenges
• Real vs. promised benefits of tokenization

Listen to the Alternative Insight podcast episode:

Listen to “Digital Assets: Where is the private markets revolution tokenisation promised?” on Spreaker.

If you like what you heard, head to Spotify, Apple Podcasts or wherever you listen to podcasts, find Alternative Insight podcast by the Aztec Group and hit the subscribe button, so that you receive all future episodes as soon as they’re published!

Podcast disclaimer:
This recording has been prepared by the Aztec Group and is made available by Spreaker for and on behalf of the Aztec Group for private or non-commercial use. By accessing this podcast you acknowledge that the entire content and design of the podcast are the property of the Aztec Group and are protected under applicable laws and should only be used for private or other non-commercial use. You further acknowledge that neither Spreaker nor the Aztec Group provide any warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. Information and opinions are provided for general information purposes only and do not constitute legal or other professional advice. Any reliance you place on such information is strictly at your own risk. For full details please click here.

In the second part of our two-part Alternative Insight series on Digital Assets, Aztec Group’s Simon Ware, Product Associate Director, is joined by Design Lead at FundAdminChain and adviser to Schroders, Dr Ian Hunt, and Eran Fabian from Bite Investments, to cover the mainstreaming of digital currencies, and how far off a single operating model might be for private markets.

During this episode they discuss:

• The future of digital currencies and tokenised assets as they become more mainstream
• The need for a single operating model that isn’t product or jurisdictional specific
• How digital assets can evolve the investor experience and meet regulatory demands.

Listen to the Alternative Insight podcast episode:

Listen to “Digital Assets: How far off is a single operating model in private markets?” on Spreaker.

If you like what you heard, head to Spotify, Apple Podcasts or wherever you listen to podcasts, find Alternative Insight podcast by the Aztec Group and hit the subscribe button, so that you receive all future episodes as soon as they’re published!

Podcast disclaimer:
This recording has been prepared by the Aztec Group and is made available by Spreaker for and on behalf of the Aztec Group for private or non-commercial use. By accessing this podcast you acknowledge that the entire content and design of the podcast are the property of the Aztec Group and are protected under applicable laws and should only be used for private or other non-commercial use. You further acknowledge that neither Spreaker nor the Aztec Group provide any warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. Information and opinions are provided for general information purposes only and do not constitute legal or other professional advice. Any reliance you place on such information is strictly at your own risk. For full details please click here.

Below is a selection of the questions our attendees asked following our webinar, European fundraising 101: Deciding your domicile, held last month. Our expert panel comprising Alexandrine Armstrong-Cerfontaine, Partner Goodwin Procter; Gregg Beechey, Partner Fried Frank; and Aztec Group’s Marcia Rothschild, European Desk Head, and Head of Investor Services for the U.S., Sadrack Belony, pooled their experience to answer them comprehensively.

1. There is a narrative that Ireland makes the most sense for U.S. and UK managers. Will the potential changes to the Irish AIF Rulebook make Ireland more competitive compared to Luxembourg?

It is a narrative, but not the only one, since historically many investors and fund managers have regarded Luxembourg as more attractive than Ireland. However, the Central Bank of Ireland’s recent changes to the Irish AIF Rulebook have leveled the playing field across both jurisdictions. Overall, the difference between Ireland and Luxembourg remains finely balanced and many factors might play into which one works best for managers and their potential investors.

2. What choices are you seeing managers make when considering master feeder, co-investment and parallel funds?

For a master-feeder to be eligible for the Alternative Investment Fund Manager Directive (AIFMD) passport both the master and feeder need to be established in the European Economic Area (EEA), so it must be set up in either Luxembourg or Ireland, leaving little scope for creativity. By contrast, parallel funds may be established in all sorts of locations. As regards co-investments, these vehicles are set up for investment opportunities offered by a manager or lead sponsor to investors to participate in one or more investments alongside an existing fund structure. There are many alternative structures that may be considered and various reasons why a co-investment is an appropriate solution. For example, an investment exceeds the available undrawn capital of a fund, an investment would otherwise breach fund-level investment restrictions, the vehicle may be useful taking into account portfolio construction and/or diversification considerations, or there may be a strategic benefit to bringing in a particular co-investor.

3. Does it make any difference what domicile a U.S. manager chooses if they are setting up a semi-liquid fund to fundraise in Europe? And what is the distribution benefit for using a UCI Part II if the AIFMD marketing passport remains limited to professional investors?

In theory there is no difference, however in practice a jurisdiction with a well understood semi-liquid structure, for example Luxembourg’s UCI Part II may be more suitable because of investor and distributor familiarity. You can read more about operating semi-liquid funds here.

So, the benefit of using a UCI Part II primarily lies in investor and distributor familiarity.  Also, certain EEA regulators are more prepared to allow marketing of Part II funds to retail investors despite the lack of a passport because it is at least a regulated retail product. You can read more about the classification of retail investors here.

4. What are the trends and regulations around market sounding (separate to pre-marketing)?

This is a very difficult question to answer in isolation, because the breadth of the pre-marketing definition makes any market soundings outside the pre-marketing regime (so called pre-pre-marketing) quite nuanced and difficult to manage. You can read more about it in this chapter of our comprehensive guide to fundraising in Europe for U.S. fund managers.

5. Can you differentiate Luxembourg and Switzerland as domiciles for a new European infrastructure fund with investors and target assets primarily in Europe and UK?

Switzerland is not in the European Union or EEA, so it does not offer any of the AIFMD advantages that Luxembourg does, which would be a clear disadvantage. You can read much more detail on the topic in this chapter of our comprehensive guide to fundraising in Europe for U.S. fund managers.

You can read our comprehensive guide for U.S. fund managers raising funds in Europe which features the expertise of our Aztec team along with a selection of experts in the area, including Gregg Beechy and Alexandrine Armstrong-Cerfontaine.

You can watch the full webinar recording here:

If you have additional questions that aren’t covered here or simply want to discuss a topic raised here or during the webinar, please contact us.

In an exclusive article for ACI, Kevin Hogan and Todd Werner discuss how technology is reshaping the Private Credit industry and why integrated tech solutions are essential for success.

Private credit is scaling fast, projected to hit $2.6 trillion by 2029 according to JP Morgan. Fund managers still relying on siloed systems are in for a rude awakening. The future is integrated, automated, and investor-ready. The asset class’s rapid expansion, coupled with increasingly complex strategies to meet borrowers’ needs, means that firms must adapt, and fast. Fund managers can no longer rely on the fragmented data systems that were sufficient for a simpler, lower volume, and less sophisticated industry.

Private credit investors are also becoming more mainstream and include wealth management platforms, pension funds and insurance companies. These institutional LPs are more demanding, having historically been exposed to daily public market trading strategies. Regulatory bodies too are turning their attention to private credit, mandating transparency, and clarity as the asset class expands in size and scope.

To meet these needs private credit is leaning into technology adoption to better manage:

1. Volume – larger funds mean more transactions and scaling is essential to meet demands.

2. Automation – properly harnessed and embedded in daily processes to deliver a competitive edge.

3. Data – real-time data collection and analysis from a single point of truth is a differentiator.

4. Liquidity – robust investor servicing technology to support evergreen and semi-liquid fund structures, designed to attract capital from new sources, including retail investors.

5. Products – advanced waterfall functionality to support complex fund structures, such as rated note feeders, which are used to attract insurance capital seeking exposure to private credit returns with favourable risk-based capital treatment.

6. Transformation – orchestrated management of both internal and client-facing change is imperative to identify required adjustments and implement them effectively.

As a market-leading administrator, Aztec is adopting industry relevant technology at pace. We are helping our clients to do the same.

A good example of how technology has overhauled the industry is machine reading capabilities. Now high volumes of unstructured data, such as agent notices and client invoices, can be processed to extract core information, ready it for review, and deliver real-time reports to clients. More specifically for private credit, Aztec’s unique integrated loan and GL model, incorporating expert teams, best-in-class technology, and data management expertise provides comprehensive and timely reports for managers to make investment decisions based on integrated data.

Technology solutions like this provide tailored solutions for fund accounting, loan administration, and investor communications. Coupled with a dynamic digital workspace like Aztec Connect and a seamless investor experience like Aztec Invest, which manages investor fundraising and onboarding, enhancing delivery and transparency. This uplifts the overall investor experience.

Key to the ongoing adoption and implementation of industry-specific technology is understanding what fund managers now need to manage their business more efficiently, while evolving and scaling processes to take advantage of the rapidly evolving opportunities private credit offers.

Private credit’s inflexion point for technology adoption is most likely to succeed if delivered through partnerships where clients and providers ensure systems and processes implemented meet the current needs and future wants of both parties. This disciplined approach to business transformation is best realised through expertly planned change management, which Aztec is adept at as we continue our own successful evolution as a transatlantic, market-leading private markets fund administrator for alternative investments.

Click here to read the full ACI report, or to find out more, please contact us below.