The Great Unlock: How Private Markets Are Opening Up to Everyday Investors

TL;DR

Investing in private markets once required R10 million or more, the right connections, and the patience to lock up your money for a decade. That is changing. Retail capital flowing into private markets has more than doubled in two years, new fund structures have reduced minimums to as low as R20, and regulators from Washington to Pretoria are actively clearing the path for individual investors to participate. Here is what is happening, why it matters, and what South African investors should know.

Private markets have long been the domain of large institutions.

Pension funds, endowments, and sovereign wealth funds — from the University of Yale's endowment to South Africa's Public Investment Corporation — have been investing in private equity, private credit, and real assets for decades. They typically allocate 10-30% of their portfolios to alternatives, and the results have been strong enough to keep them coming back.

Individual investors, for the most part, have not had the same access.

Investing in a private equity fund typically required minimum commitments of $250,000 or more, accredited investor status, and often a personal introduction to the fund manager. Capital was then locked up for 7-10 years.

Private markets were not deliberately designed to exclude ordinary people. But the structures, regulations, and economics of the industry meant that individual investors were effectively locked out.

That is changing.

The scale of the shift

In the United States, retail capital flowing into alternative investment structures reached $204 billion in 2025, more than double the $92 billion recorded just two years earlier. Globally, retail alternative assets have grown at nearly 60% compound annual growth over four years, reaching approximately $360 billion.

The overall private markets industry is growing alongside this trend. Bain & Company projects that private market assets under management will reach $60-65 trillion by 2032, growing at more than twice the rate of public markets. Individual investors are expected to represent 22% of that total by 2030, up from about 16% in 2022.

A State Street survey found that 56% of institutional investors believe retail-style vehicles will account for at least half of all private market fund flows within two years. By 2030, retail and institutional fundraising channels could be roughly on par.

Why now?

Three developments are converging.

1. New fund structures are lowering the barriers

The traditional private equity fund was designed for institutions. These funds were closed-end vehicles with ten-year lives, involved capital calls, and required minimum investments measured in hundreds of thousands or millions.

That model still exists. But alongside it, a new category has emerged: the evergreen or semi-liquid fund.

Evergreen funds held more than $493 billion in total net assets as of the third quarter of 2025, growing at over 30% annually, with projections to reach $1.1 trillion by 2029. Unlike traditional funds, these structures allow periodic subscriptions and redemptions, making them far more accessible to individual investors.

The minimums have also dropped significantly. Some semi-liquid structures now accept investments as low as $10,000 or even $2,500. The European Union's ELTIF 2.0 regulation eliminated minimum investment thresholds entirely, opening the door to mass participation.

The underlying investments remain the same — private companies, real assets, and private loans. What has changed is the structure through which investors access them.

2. Regulators are clearing the path

In August 2025, the United States issued an executive order titled "Democratizing Access to Alternative Assets for 401(k) Investors." The order directed the SEC and Department of Labor to open America's $12.5 trillion defined contribution retirement market to alternative investments, including private equity, private credit, real estate, and digital assets.

The SEC also dropped its 15% limit on private fund investments for retail closed-end funds, removing one of the long-standing barriers to broader retail participation.

In Europe, ELTIF 2.0 is creating a continent-wide framework for retail private market access. In Asia, regulators in Singapore and Hong Kong are developing their own approaches. In South Africa, the regulatory environment is following a similar path.

The South African Reserve Bank has placed stablecoins and tokenisation as key priorities in its digital payments roadmap. Both Luno and VALR received official crypto asset service provider licences from the FSCA in 2024, establishing a regulated infrastructure for tokenised asset distribution. Regulation 28 already allows pension funds to allocate up to 15% to private equity, recognising that retirement funds need exposure beyond listed markets.

Globally, the regulatory direction is consistent: enabling access rather than restricting it.

3. Tokenisation is reshaping distribution

Tokenisation turns investment products into digital tokens that can be held, transferred, and traded on regulated platforms. It reduces the friction and cost of distributing investments and makes fractional ownership practical.

In South Africa, this is already in motion. Luno launched tokenised US stocks in August 2025, accessible from as little as R20, to its million-plus South African client base. VALR launched the USD Private Credit Token (USDPC), the first tokenised real-world asset product of its kind in Africa, backed by a private credit strategy with a 10-year track record targeting 8-10% annual returns.

The World Economic Forum has described this broadening of private market access as one of the most significant structural shifts in financial markets in decades, with the potential to direct more capital toward mid-market enterprises, sustainable infrastructure, and innovation-led growth.

Emerging markets like South Africa may adopt tokenised private market access faster than developed countries. Markets that lack deeply entrenched legacy financial infrastructure can leapfrog directly to new models, in the same way Africa adopted mobile payments before much of the developed world.

The allocation gap

Institutional investors allocate approximately 15% of their portfolios to private markets. Individual investors typically allocate 0-3%.

The individual investor market is roughly twice the size of the institutional market globally, representing an estimated $80 trillion in potential assets. Yet it remains barely penetrated by private markets — largely because of the access constraints described above rather than a lack of demand.

For a South African investing through a stockbroker or investment platform, the accessible universe has historically been limited to JSE-listed equities, offshore ETFs, unit trusts, retirement annuities, and bank deposits. Meanwhile, as we discussed in our article on the shrinking JSE, the public markets available to retail investors are getting smaller. The JSE has lost roughly half its listed companies in two decades. Globally, the number of publicly traded US companies fell from 7,300 to about 4,300, while PE-backed companies grew from 1,900 to 11,200.

Growth is increasingly concentrated in private markets. The companies and the returns have been there for years — what has been missing is a practical way for individual investors to participate.

What this means for South African investors

South Africa is positioned at an unusual convergence: a shrinking public market (JSE delistings continue at pace), a supportive regulatory framework (FSCA licencing, SARB's digital roadmap, Regulation 28 provisions), and an emerging distribution infrastructure (Luno, VALR, Mesh.trade).

For individual investors, this has several practical implications.

The investable universe is expanding. Two years ago, private credit exposure was only available through what a retirement fund allocated on your behalf. Today, tokenised private credit is directly accessible through licenced platforms — a meaningful shift in what is available to retail investors.

Due diligence becomes more important, not less. More access means more choices, and not all private market investments are structured equally. When major private credit funds gated withdrawals in March 2026, it demonstrated that the structure of an investment — not just its label — determines how it performs under stress. Understanding the difference between asset-backed and unsecured strategies, between debt and equity, is essential.

Lower minimums allow for gradual exposure. With fractional access available from as little as R20, investors can allocate a small portion of their portfolio to private markets and build familiarity before increasing their exposure.

Liquidity constraints remain. Even with tokenised structures and secondary markets, private market investments are generally less liquid than listed stocks or ETFs. This is part of how they generate returns — the illiquidity premium — and investors should be comfortable with the holding period before committing capital.

Important caveats

Broader access does not mean all private market products are worth investing in.

Product quality varies significantly. When a new asset class opens up to retail investors, lower-quality products tend to proliferate alongside genuine opportunities. Democratisation increases the range of options available — it does not reduce the need for due diligence.

Semi-liquid is not the same as liquid. The March 2026 private credit crisis demonstrated what happens when investors expect public-market liquidity from private-market assets. If capital needs to remain accessible at short notice, private markets may not be appropriate for that portion of a portfolio.

Private markets complement traditional investments; they do not replace them. As we discussed in why adding private markets to your portfolio, most allocation frameworks suggest 5-10% in alternatives as a starting point, building from there.

Manager and platform selection is critical. In private markets, the performance gap between top and bottom quartile managers is far wider than in public markets — ranging from 5 to 13 percentage points between 2013 and 2023, according to BlackRock data. The quality of the manager and the structure of the underlying strategy have an outsized impact on returns.

The bigger picture

The distinction between "public" and "private" markets has always been somewhat artificial — it describes where something trades, not what it is. A solar farm generating electricity is the same solar farm whether its ownership stake sits on an exchange or on a tokenised platform.

The infrastructure of financial markets is now catching up with this reality. The technology exists (tokenisation, blockchain-based settlement). The regulatory frameworks are being built (ELTIF 2.0, the US executive order, FSCA licencing). And the demand is evident, with retail alternative assets more than doubling in two years.

For some investors, private markets will remain inappropriate — the liquidity constraints, complexity, and manager risk are real. But the blanket exclusion that kept individual investors out for decades is ending. For those who understand what they are buying, who manages it, and how it fits into their broader portfolio, private markets are becoming a genuine option.

This article is for educational purposes only and does not constitute financial advice. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.