Private markets are no longer a niche reserved for institutional investors. As wealth clients gain greater access to the asset class, the real question is becoming less about whether to invest and more about how to do it well. Illiquidity, risk tolerance, portfolio construction and the wide range of available strategies all require a different framework from that used for traditional listed assets. And the challenge does not concern investors alone: banks and financial advisors also need the right tools, knowledge and processes to assess, explain and implement these investments for their clients.
This is precisely where S64 operates: connecting asset managers and private wealth through structures, technology and local implementation designed to make private markets and hedge funds more accessible and easier to integrate into wealth portfolios. In this conversation with Tarun Nagpal, CEO of S64, we explored how the approach to private markets is evolving and how different geographies are progressing in terms of adoption, access and opportunities.
For readers who may not yet be familiar with the company, what role does S64 play in the private wealth and alternative investment ecosystem?
Historically, private market asset managers and GPs have focused almost exclusively on institutional investors, while many private banks have had limited interaction with alternative investments. These two sides of the market have therefore not always been naturally connected. S64’s role is to make that connection much more seamless, by addressing three key challenges. The first is structural. Institutional funds are often not suitable for private clients. Private wealth investors may require regulated vehicles, different liquidity features and a different legal and compliance framework. One of our core roles is therefore to work with both asset managers and private banks to create structures and vehicles that are suitable for wealth clients.
These can include feeder funds and closed-ended vehicles, such as AIFMD-compliant Luxembourg feeder funds, where minimum ticket sizes can be reduced – for example, to around €100,000 – making them accessible to professional and semi-professional investors in markets such as Italy. As you move further towards the mass-affluent segment, structures such as evergreen funds and ELTIFs become increasingly relevant. We work with GPs, asset managers and private banks to create these more regulated and, in some cases, open-ended solutions. That addresses the structural side of access.
The second challenge is operational infrastructure. Private banks need to manage reporting, tax reporting, valuations and data that often arrive at different times and with different frequencies. Private market funds may provide valuations monthly or quarterly, sometimes with a delay of 15 to 30 days, which does not always fit naturally within the infrastructure banks use for traditional investments. Through our Arena technology platform, we provide infrastructure that allows banks not only to access private market products, but also to manage and interact with them more efficiently. Arena supports reporting, valuations and tax reporting through a single white-labelled technological framework, rather than requiring banks to manage each individual fund through separate spreadsheets, PDFs and different reporting cycles. This gives banks a single view of the private market products they work with and standardises the infrastructure behind them, making the experience more seamless both for the bank and for the end investor. Arena is also configurable for every set-up we see at Italian private banks, with nominee disaggregation and data protection built in, along with an education academy for advisor training.
The third pillar is localisation. Even within Europe, common regulatory frameworks such as AIFMD and MiFID still require significant local adaptation in areas such as taxation, regulation and market infrastructure. Our role at S64 is therefore to adapt the solution to the specific requirements of each market, from the documentation and tax treatment, to the language the platform runs in.
From your global perspective, what distinguishes markets that are successfully expanding private market access from those that are still struggling to move from ambition to execution?
The US is already very advanced in this area, having been active in private markets for a long time. The key question is whether private markets become a strategic part of the overall asset allocation framework for clients. Are banks embracing them not just as a side opportunity for certain clients, but as part of the broader portfolio allocation, for example, alongside equities and fixed income?
In our work with private banks across Europe, the Middle East and Asia-Pacific, that is the key difference we see between markets that are truly integrating private markets into their overall wealth offering and those that are still approaching them more opportunistically. If you look at markets such as Singapore, Hong Kong, the US and Australia, many firms have moved towards a proper CIO-level asset allocation framework, recommending that clients have anywhere from 5% to 20% exposure to private assets. Once you make that recommendation, the next question is: what are you actually recommending clients invest in? That is where the second step begins, and it is where we help address many of the barriers to entry.
Europe is often discussed as a single market, but wealth management models, regulation and investor behaviour remain highly fragmented. How significantly does this affect the development of private market solutions?
On the positive side, Europe now has frameworks that make it possible to create vehicles that can address multiple markets. ELTIF is a good example. Before the ELTIF framework, there was no real unified way to reach non-professional clients across Europe. But even with ELTIF, having a vehicle that can technically be marketed across different countries is only the first step. If you want to enter a market such as Italy, you still need to address local regulation, tax requirements, infrastructure and implementation. The same applies in Germany, France or Spain. The EU framework is very helpful because it creates a common legal structure, but each market still requires a significant degree of localisation before a product can actually be distributed effectively. That is where a lot of work is being done across the industry and it is a big part of what we do. It is really about solving the “last mile”: the operational infrastructure, local requirements and platform integration needed to make these products work in each market.
Within this European landscape, where does Italy stand? How are Italian banks and wealth managers approaching private assets compared with their counterparts elsewhere in Europe?
Italy has been relatively at the forefront of private market adoption in Europe, particularly within private banking. One of the main reasons is the country’s large entrepreneurial HNW community. Many Italian private banks serve entrepreneurs who have built wealth through their own companies, exited businesses or managed family-owned firms. As a result, these clients tend to be naturally more familiar with private market investments and more open to considering them as part of their portfolios. This underlying demand, combined with a regulatory and structural environment that has allowed private market solutions to develop, has made Italy one of the faster-moving markets in Europe the opportunity in Italy is one that S64 takes very seriously. Led by Fabrizio Mazzucato, Head of Italy Coverage, we are working with Italian private banks across technology, advisor education, product solutions and lifecycle operations. The goal is for private markets to become a core part of how Italian private banks look after their clients’ wealth. In markets such as the UK, adoption has moved at a different pace, which I think reflects differences in the type of client base private banks are serving.
Looking five years ahead, or more, what will determine whether private markets become a genuinely structural component of global wealth portfolios?
I think a few things need to come together. The first is for the private banking industry to fully embrace private markets within the asset allocation framework. Of course, this will not be suitable for every client, as not everyone has the same tolerance for long-term illiquidity. But for those who do, private markets can become a genuine component of the overall portfolio. The second challenge is how to integrate alternatives into discretionary portfolio management and, more broadly, how to manage liquid and illiquid assets within the same allocation framework. For example, if the liquid part of a portfolio falls significantly, an allocation to private markets that was initially 15% can suddenly represent 20% of the total portfolio. There is still a lot of work to be done around how to manage that interaction between liquidity and illiquidity over time. The third element is operational infrastructure.. It is one thing to say that a client should have a certain allocation to private markets; it is another to implement that allocation effectively if data is not transparent, valuations are delayed or reporting is fragmented.
So, over the next five years, I think the key will be to combine a more structural approach to asset allocation with better frameworks for managing liquidity and illiquidity, and stronger operational infrastructure around data, valuations and reporting. Front-line education will also be critical. Even if the framework works in theory, adoption becomes much harder if the people speaking directly to clients do not fully understand the asset class and cannot explain it effectively. Together, these elements will determine how far private markets can become a structural component of wealth portfolios.
