The rise and rise of private equity and debt is reshaping public markets with consequences we are only beginning to understand.

There is now some $12tn of private equity and debt investments in businesses, real estate and infrastructure. The growth has been driven by multiple factors. On the supply side, there is abundant capital from family offices, wealthy individuals and institutions which are sacrificing liquidity in hopes of higher returns and exclusive early access to profitable deals.

On the demand side, private capital is attractive due to the high cost of public issues such as initial listing expenses and ongoing regulatory compliance. Other factors include fewer onerous reporting obligations and less rigour around related-party transactions and expenses. Some founders also avoid public markets because of concerns about loss of business and operational control. For ventures that have low funding requirements, founders and original investors can maximise their profits and retain control longer by delaying raising public equity.