Private capital’s allocator push
Rising interest from GPs in buying allocators allows them to capture the upside from structural trends, as long as they avoid conflicts of interest.
The private capital sector is increasingly targeting allocators, specifically wealth managers and advisers, driven by the growing accessibility of private market products for retail investors. This trend allows general partners (GPs) to capitalize on the increasing capital flowing into private markets from individual investors seeking potentially higher returns. The democratization of private markets is viewed as a significant driver of assets under management (AUM) growth for wealth managers, making these firms attractive acquisition targets for private equity. This strategy provides GPs with a new avenue for capital deployment and exposure to an expanding client base.
Several prominent private equity firms have made significant moves in this space. Carlyle acquired a majority stake in registered investment adviser (RIA) MAI Capital Management. Similarly, Bain Capital bought Perpetual Wealth, a division of an Australian wealth manager, in the same month. Prior to Carlyle’s majority stake, MAI completed 30 acquisitions under a private equity ownership that included Harvest Partners. This demonstrates a prevailing "buy-and-build" strategy within the fragmented wealth management sector, enabling rapid scaling and access to new regions and client communities.
While the importance of client trust in wealth management offers some resilience against complete AI disruption, the sector is not entirely immune to technological advancements. Examples such as Altruist Corp's AI-powered tax planning engine have highlighted potential pressures on profit margins for wealth managers. However, many in the industry, including private equity investors, view technology and AI as opportunities to enhance client propositions rather than purely as disruptive threats. They anticipate integrating AI to improve services and efficiency rather than replacing human judgment and established relationships.
Structural trends beyond technology, such as demographic shifts, are also contributing to the attractiveness of the allocator sector. The UK’s ageing population means there is a growing pool of pension capital that is ready to be deployed. The 2025 Mansion House Accords marked a voluntary commitment from 17 UK workplace pension providers to invest at least 10% of their defined contribution default funds in private markets by 2030. Nordic Capital, as part of a consortium including CVC and ADIA, took British investment platform and wealth management business Hargreaves Lansdown private, highlighting the strategic interest in platforms that can channel long-term savings into private market investments.
Beyond wealth managers, private capital also shows interest in insurers, using strategies to secure permanent capital sources. The $11 billion merger between Apollo and Athene is the most high-profile example. The deal offered the alternative asset manager a permanent source of capital to invest in its funds. This model allows alternative asset managers to expand their balance sheets and invest alongside their clients. Apollo says that it originated 73% of Athene’s assets, while 17% are classed as being affiliated with the firm, a measure in the insurance industry that is used by regulators to help monitor related-party exposures. These deals, however, also raise questions regarding potential conflicts of interest, particularly concerning policyholders and regulatory oversight of related-party exposures.
These activities signal a strategic pivot by private equity firms towards controlling distribution channels for private market investments. By acquiring wealth managers and other allocators, private capital is aiming to capture a larger share of the value chain, ensuring a consistent inflow of capital from both institutional and, increasingly, retail investors. This trend underscores a long-term commitment to broadening the investor base for private assets and integrating financial advisory services more closely with private capital deployment strategies, while navigating potential regulatory scrutiny regarding conflicts of interest and investor protection.