From product strategy to domicile: building for growth in European private markets

Ankit Jain Head of Private Markets

For years, product design for private assets was largely built around institutional investors, closed-ended structures and long investment horizons. Today, private wealth is becoming a bigger source of capital, while evergreen and semi-liquid structures are providing new ways to broaden access. Product design is becoming a commercial decision as much as a structural one.

Providing a taste of our Private Guide series, this article lays out the practical considerations behind product success for European private markets – and looks ahead to the domicile decisions that should follow product design.

Start with the investor

The obvious place to start might be the fund structure: closed-ended, evergreen or semi-liquid. But the more fundamental question is who the product is designed to attract. Institutional investors, private wealth and retail investors can have very different expectations around investment horizons, liquidity, transparency, minimum investment sizes, and governance and reporting.

That becomes particularly important in Europe, where managers may look to transplant an existing strategy to reach a new pool of investors. The investment approach does not necessarily need to change, but the product around it might.

Liquidity has to be practical

The growth of semi-liquid and evergreen structures, which give investors defined routes to access their capital, is creating new opportunities for private market products, but access to liquidity cannot be treated as a feature added at the end of the design process. A fund that offers investors the ability to withdraw at set intervals still needs a portfolio that can support those terms, alongside appropriate valuation, governance and operating arrangements.

The underlying assets are a big part of that equation. Private equity typically involves longer holding periods, while private credit can offer more predictable cash flows; infrastructure, real estate and mixed-asset strategies sit somewhere in between. The structure needs to reflect the choice of assets, rather than the other way around.

The next decision is where the product calls home

Once the product strategy is defined, domicile becomes the next natural decision. Luxembourg and Ireland account for the vast majority of global cross-border fund registrations, but they offer different combinations of fund structures, regulatory frameworks, investor access, tax treaties and supporting infrastructure. The choice is therefore about what the strategy and its target investors need from a domicile, rather than simply choosing between the two largest European fund centres.

This is the focus of chapter two of the Private Guide, which looks more closely at the domicile decision: what a fund needs from its jurisdiction, how the regulatory and operating environment affects that choice, and how the decision changes when a manager is extending an existing European platform rather than building one for the first time.

Building for what comes next

For a new European private markets fund, choosing a domicile typically follows the initial product design. For an established platform, the question is whether the structures and infrastructure already in place can support the next phase of growth. New products, new investor segments and changes in regulation can all create a reason to reassess how the platform is structured and domiciled.

Those decisions are connected. The investor base influences liquidity and distribution; the underlying strategy affects which structures will work; and the domicile determines some of the structures and

infrastructure available to support the product. Getting those choices to work together is what turns a fund strategy into a viable European proposition.

Want to explore what comes next? Subscribe to the Private Guide series to be among the first to receive chapter two when it goes live.

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