The lines are blurring between GPs and LPs. Ten years ago, the rules of engagement were clear: GPs were in charge of selecting and structuring deals, LPs monitored performance. Now, for economic reasons, LPs are becoming more active and ramping up the pace of co-investments and direct deals, as they seek control on the pace and scale of investing, rather than be passive observers.

With more negotiating power, a new hybrid model is beginning to emerge where LPs behave more like GPs.

LPs step into the GP role

GP stakes are one way of providing accretive value, with firms such as Wafra aiming to act as a bridge between GPs and LPs. By buying a piece of the GP’s management company, investors receive a share of the economics through the management fee and carry, which can enhance returns and influence.

As well as giving access to new emerging management teams, platform operators of GP stakes can also support LPs in respect to controlling concentration risk and diversification of co-investments, as and when they are presented by respective fund managers.

Co-investments are an effective way for LPs to prove their value to GPs as reliable capital solutions providers. Some LPs get too caught up on the fee side without properly scrutinizing deals. Speed of execution is vital, with several investors at IPEM Global 2025 noting that investment committees need to make definitive decisions within a few weeks; saying no is fine, just don’t leave the GP waiting at the altar.

Thanks to a close collaboration between BNP Paribas Asset Management and BNP Paribas Wealth Management, the asset manager has been able to complete a second close of the BNP Paribas Agility Co-Invest Fund 2 at EUR700 million. The commingled fund will give investors diverse exposure to up to 50 co-investments alongside leading European private equity funds.

Co-Investments as a Strategic Lever

Longer fundraising cycles are causing many GPs to turn to co-investment dollars to complete deals and deepen relationships with select LPs. Approximately $33.2 billion of co-investment activity was recorded in 2024. Equally, as LPs reduce the roster of GPs they commit capital to, co-investments are a useful way to: i) reduce concentration risk; ii) improve the risk-adjusted performance and iii) lower the total expense ratio of PE funds in their portfolios.

Better data can help both GPs and LPs pick who they want to partner with. Placement agents are becoming more specialized too in this area of the market, which is also helping LPs find optimal co-investments for their allocation programs.

“Portfolio analysis is key and technology is helping LPs with this. It has become much more sophisticated. Now there are more placement agents bringing deals to the market, which is giving more access…this will change the whole industry in the next 20 years,” remarked the head of private equity for a private bank and asset management group.

One key point made during IPEM Global was that LPs themselves have to bring something to the table. Those who can provide specific knowledge, and act as a capital solution provider, will be best placed. As the market evolves, co-underwriting and midlife transactions are rising alongside more passive syndication-focused deals. This is raising the bar and it comes with even greater deadline pressure. That’s ultimately the prize to pay if LPs want to become more active, strategic partners.

While co-investments bring LPs closer to the deal, some of the world’s largest and sophisticated investors like Canadian pension plans have built their own direct investment and operating partner teams to execute deals directly. However, as minority investors, this means they have to be a desirable partner to GPs and founders. It also means paying close to attention that they see eye to eye with GPs on exit horizons, value creation plans, business priorities etc. If not, it can introduce a number of governance risks.

As large balance sheet investors, it can, in certain situations, place institutions in a more competitive position than GPs. However, it was stressed during IPEM Global that pursuing direct investments is not intended to disrupt or erode GP relationships. “Our GPs have deeper resources than we do with sector research teams and the depth of their global footprint. We are very humble about the situations where we feel we can bring something to the table,” said one institutional LP.

LPs will need to carefully consider how they balance offence and defense. Evolutionary change is good. Revolutionary change opens up risks as the GP/LP relationship continues to deepen and mature. As the industry moves toward hybrid models, where LPs act more like GPs and successful GPs integrate LPs as extensions of their platform, the future will be defined less by bargaining power than by collaboration.

Scale, Convergence, and the Next Phase of Private Markets

As large platform players seek to build out their private market capabilities to serve a wider selection of investors, including private wealth and even retail, they are having to ask themselves: Do we have the risk appetite for a private markets strategy? Are we speaking to the right clients in the right regions?

This is fast becoming a size game as investment managers seek to cover all asset classes and geographies under one roof as institutional LPs – as well as private wealth platforms – seek to build deeper relationships with a smaller number of GPs. As well as speed, size is critical to accessing the biggest and best deals and projects (infrastructure) but it is critical for firms to remain at a level where capital can be deployed with conviction to drive profitability. For firms that have traditionally operated in public markets, pursuing M&A opportunities opens up the route to attracting and retaining talent with a strong culture of out performance. Also, aligning internal capital with third party LP capital is central to effective product design and building trust.

“In a world where private markets are maturing and becoming more specialized, it makes it more challenging on the LP side to manage all the different counter parties. This puts us under pressure as an asset manager to be relevant across asset classes,” remarked one of the speakers at IPEM Global.

One of the most significant deals in Europe is BNP Paribas Cardif’s acquisition of AXA Investment Managers (AXA IM), which closed on 1st July 2025. The result is an asset management platform with over EUR1.5 trillion in AUM. The group’s insurance and pension funds investors are set to benefit from AXA IM’s expertise in private markets, as it bids to become Europe’s leader for private assets inflows.

Amundi has also sought to expand its in-house expertise in a bid to diversify and scale by acquiring Alpha Associates last year. The acquisition makes Amundi one of Europe’s leading private markets multi-manager platforms, with a combined AUM of approximately EUR20 billion.

Amundi expects to see convergence on three fonts:

🔸 A convergence of institutional and retail clients.

🔸 A convergence of providers operating in public and private markets.

🔸 A convergence of products where increasingly, illiquid products will offer a sleeve of liquidity, and vice versa.

The main driver of this three-pronged trend is access: you have to build the right product for the right client.

Passive Private Markets Indices

As public and private markets converge, the concept of LP relationships is also undergoing change. On the one hand, institutions are becoming more sophisticated active partners, as highlighted earlier. On the other hand, greater access to private markets is bringing a wide cohort of HNW individual investors to the door of GPs.

This is creating an interesting dynamic – one that is being squeezed by sophistication and expanded by democratization.

Part of the discussion at IPEM Global in Paris focused on why passive constructs are tempting in private markets yet hard to deliver. The promise is wider access, lower costs and clearer bench marking, but the frictions are real from data opacity to valuation lag and limited secondary depth. Although it was broadly accepted that the greater the transparency the more private capital firms will be able to expand the investor base. Liquidity is the real nut to crack – both depth and volume.

State Street Global Advisors took a major step forward in enabling individual investors to access private markets when they launched the first ever public private credit ETF (‘PRIV’) earlier this year: a clear illustration of public and private market convergence. The fund invests in both public and private investment-grade credit and includes assets originated by Apollo, which it also agrees to buy back when needed to in order to provide a liquidity backstop. The aim is to add more liquidity providers as the ETF scales.

The main challenge for passive PM indexes is standardization. Private credit is based on the twin pillars of scarcity and complexity. The asset class delivers performance precisely because it is not standard. How to square that circle in a passive index? Time will tell. It will depend on who is willing to make a market, and what the spread will be. Caution will be necessary rotating illiquid assets from the institutional world into the retail world. Private credit yields are enticing yet investor education and setting proper guardrails, such as investment limits, will be necessary if, and when, new indexes emerge.

This is not to suggest a total transformation or re-engineering of private markets strategies to fit a public market audience. “It’s about creating products that give them a flavor of what private markets are,” remarked one of the panelists.

Looking ahead, passive private market indexes will likely emerge first in narrow slices where data is cleaner and secondary liquidity is real; especially IG private credit with substantial public sleeves. Shared definitions, disciplined valuation and guardrails for retail channels will be vital.

📰 News from the floor

Check out the latest hot-off-the-press industry updates from across the IPEM Community:

🔸“In the Gaps”, the latest Alternative Credit Newsletter by AresInvesting in Europe white paper by Eurazeo

🔸The Case for Small Buyouts white paper by RCP AdvisorsApollo expands its wealth platform with three new evergreen ELTIFs

🔸P10 Announces Dual Listing on NYSE Texas‘Day in the life’ animated video explaining asset-based finance by Ares

📊 Statistic of the day

Fresh from the IPEM Allocation and Fundraising Trend Report 2026

More than EUR100 billion of LP funding was expected among the more than 1,500 LPs who attended IPEM Global 2025.

🗨️ Quote of the day

“What I see for the next five years is a very strong growth in Asia, higher than in Europe and the US, and very strong growth, at least twice as strong as traditional active management, both on the passive side and on the very active private asset side.”