High-Net-Worth Investors to Boost Growth in Private Equity: Opportunities, Risks and Other Important Considerations

Written By Matthew Hunt and Dominique Carli

Globally, private equity is expected to double its current assets under management (AUM) to US$12 trillion by the end of 2029, driven in large part by private wealth investors, according to new Preqin research.

PitchBook also projects trillions of dollars of new capital flowing from private wealth investors into private equity in the coming years. In unpredictable economic conditions, private equity is viewed as a safeguard against inflation and market fluctuations. High-net-worth individuals (HNWIs) are boosting their private equity allocations in pursuit of higher returns and greater diversification beyond public markets.

Since the start of 2019, there have been more than 200 private equity fund launches targeting private wealth investors. Increasing investment from private wealth into private equity brings new opportunities, risks and other important considerations to private equity transactions. This post outlines some important considerations for private equity funds, family offices and evergreen funds in particular.

Private Equity Funds

A significant opportunity for private wealth investment in private equity funds is the potential for elevated long-term returns through access to exclusive investment prospects not typically available in public markets. For HNWIs, these investments can diversify their portfolios, provide enhanced returns compared to traditional asset classes and align with long-term financial goals.

With opportunity comes risk and it is important to consider that private equity funds often require investors to lock up capital for extended periods of time, potentially limiting liquidity and flexibility. Investors may not see returns until later in the fund’s lifecycle, as investments mature and are exited. Additionally, private equity returns are heavily influenced by market cycles. Economic downturns or sector-specific challenges can delay exits or reduce returns. Private equity funds often utilize significant leverage to acquire portfolio companies, which bears the risk of amplifying losses in an economic downturn.

Tax implications are also significant, including the treatment of carried interest, distributions and gains, as well as potential cross-border tax liabilities for investments in foreign funds.

Investors must be cognizant of fund offering documents, including, terms, fees and redemption policies, while ensuring alignment with their long-term goals. Compliance with anti-money laundering (AML) and know-your-client (KYC) regulations is mandatory, and investments must adhere to rules for reporting foreign holdings and income under Canadian tax law.

Family Offices

Family offices are rapidly expanding around the world. North America is leading the way, followed by the Asia Pacific region. Deloitte’s latest Family Office Insights Series – Global Edition estimates there will be 10,270 single family offices in the world in 2030, up from 8,030 today and 6,130 in 2019. Globally, the total estimated AUM for family offices is expected to rise to US$5.4 trillion by 2030. Recently, we have witnessed family offices allocate more capital to recession-resilient sectors like infrastructure, healthcare and essential services.

Family offices often have access to unique investment opportunities that may not be available to individual investors. This access enables private wealth investors to diversify their portfolios and potentially achieve higher returns while maintaining control over their investment strategies. However, large portions of family office portfolios are often allocated to illiquid investments, which can limit flexibility in times of financial need.

Tax implications are critical, particularly regarding inter-generational wealth transfers. Cross-border investments may require additional reporting, while estate planning and succession strategies must consider legal mechanisms for smooth transfer of assets.

Evergreen Funds

PitchBook reports that a significant shift toward evergreen fund structures is underway amid a sluggish fundraising environment. These funds provide the benefit of allowing investors to buy in at periodic intervals, enabling the provision for intermittent liquidity, as well as having no predetermined end. Limited partnerships often get exposure to a seasoned portfolio of diversified assets, and that exposure can then compound.

Sagard is the latest alternative asset manager to capitalize on the growing interest of retail investors in private equity investments through a new fund launch. In January 2025, the Montreal-based firm introduced an evergreen vehicle targeting Canadian private wealth investors with a minimum investment requirement of C$25,000. The fund aims to deliver annual net returns of 14-18 percent.

For evergreen funds, the lack of regular market pricing for private asset classes creates challenges with accurate valuation, performance monitoring and redemption pricing. The success of an evergreen fund is highly dependent on the skill and integrity of its managers. These risks highlight the need for careful due diligence, regular performance monitoring and diversification to mitigate potential downsides associated with investing in evergreen funds.

Bennett Jones Private Equity & Investment Funds Practice

The Bennett Jones Private Equity and Investment Funds group is a leader in Canada. Our clients include sophisticated financial sponsors who are looking to balance risk with expected return and who require tailored advice from the initiation of the investment phase through to exit. Bennett Jones represents all sides in private equity transactions, with particular depth on behalf of US and domestic financial sponsors. To discuss the developments and opportunities in the growth of private wealth in private equity, please contact one of the authors.

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