Doing Your Due Diligence on Private Markets

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Private markets by their very nature lack the same transparency that’s standard in public markets. But Morningstar, a leading provider of independent investment insights and ratings, is conducting more due diligence on private markets to help investors navigate the sector. Morningstar Chief Executive Officer Kunal Kapoor joins host Merryn Somerset Webb on this personal finance edition of Merryn Talks Money to tell us more.

There’s been a massive influx of capital into private markets. Kapoor highlights that the number of companies in private markets that have accepted funding from private equity is “far exceeding what’s available in the public markets . In Europe alone, you have double the number of PE-backed companies relative to public companies.”

Times are changing. Traditionally, companies seeking investment might first consider a bank or publicly traded markets on the basic assumption that they would be a cheaper source of funding. But Kapoor explains that’s not necessarily the case anymore. The pair also discuss semi-liquid funds, private asset-portfolio allocation and why investors should expect lower returns from both public and private markets.