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Over the past five years, State Street’s annual Private Markets study has tracked the industry’s evolution. Until recently, the focus has centered on how private markets can reach a broader investor base, which structures will prove most effective, and how quickly wealth channels can become a meaningful source of capital. While these themes remain important, clients ask a more pressing question: what kind of infrastructure will be required as the market expands?
The next phase of growth for private markets places new operational demands on the industry. Our fifth annual Private Markets Study, based on a global survey of 480 private markets participants, highlights where those pressures are most acute. Among European respondents, 77 percent identified liquidity management as a top concern, while 72 percent pointed to compliance and regulation.
As private markets become accessible to a broader investor base, the industry’s challenge is no longer just about attracting capital — it’s building the infrastructure needed to support growth at scale.
Growth at scale demands a new operating model
The current phase of growth, driven by expanding access to individual investors, is reshaping the industry’s operating requirements. Historically, private markets were dominated by large institutional investors. Today, firms are increasingly exploring semi-liquid vehicles and other models designed to broaden participation.
That shift brings greater opportunity, but also greater complexity. An increasingly diverse investor base places differing demands on liquidity management, servicing models, compliance, and reporting.
The industry’s operating model was built for a different era. As private markets broaden access, we need to rethink how firms can support investors at scale. This is particularly relevant in Europe, where a fragmented regulatory landscape requires an operating model that can work seamlessly across investor types, multiple jurisdictions, and distribution channels.
The liquidity management challenge
The survey highlights why liquidity management is moving firmly up the agenda. In Europe, 62 percent point to redemption and tender management as a key challenge, alongside cash forecasting (54 percent) and liquidity stress testing (50 percent).
Investors increasingly want structures that offer greater flexibility than traditional private markets funds, yet the underlying assets often remain inherently illiquid. Managing that balance requires more than incremental change. It demands sophisticated forecasting, robust operating processes, and a deeper understanding of investor behavior. Firms also need to be realistic about what semi-liquid structures can and cannot deliver.
This is an operational issue. Firms need the ability to monitor cash flows and forecast potential liquidity demands in real-time, and coordinate effectively across administrators, custodians, and other service providers. As participation in private markets broadens, these capabilities become central to operating at scale.
Compliance becomes more complex
The survey also highlights the growing scale of the regulatory challenge. Nearly two-thirds of European respondents cite investor suitability assessments and AML/KYC monitoring as significant compliance challenges associated with private markets growth.
As access expands, firms must demonstrate the ability to meet increasingly complex regulatory and governance expectations, while still delivering a positive investor experience. This requires more than incremental resources — it requires infrastructure that can support these demands at scale.
In response, many firms are therefore reassessing how technology, workflows, and service providers fit together across the investment lifecycle. The objective is no longer efficiency alone. It is resilience: building operating environments capable of supporting growth while managing operational risk and minimizing investor friction.
Infrastructure as competitive advantage
At State Street, we see infrastructure as more than an operational consideration. As access broadens, regulation intensifies, and liquidity demands evolve, it is becoming a defining source of competitive advantage. Future success will depend on the ability to support private markets expansion with systems and expertise that are scalable, resilient, and fit-for-purpose.
Read State Street’s Private Markets Study 2026 to explore the full findings on private markets growth, distribution, and operational readiness.
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