The digital transformation of private market funds is set to enable easier access and more efficient processes, says Olivier Portenseigne, CEO of FundsDLT, part of Clearstream Fund Services. New tech platforms can connect the actors of the distribution process while meeting the specific requirements of these funds.

Private markets have traditionally been an illiquid investment space, largely reserved for institutional or sophisticated investors. However, a clear shift is underway and there is growing recognition in the market of the need to make these funds more accessible, transparent and operationally efficient. Technological innovation, particularly in digital infrastructure, is responding to this demand.

Digital transformation is driving a true evolution in private market funds and their distribution. By streamlining operations, enhancing transparency and reducing costs, digital platforms can make it easier for financial intermediaries to target a broader range of investors. In particular, the rise of tech-driven fund distribution platforms and ecosystems is strengthening connections between asset managers, distributors and investors—a crucial step toward the opening-up of such funds.

Addressing operational challenges in private markets

Despite the growing appeal of private markets, the industry continues to face significant operational challenges that hinder scalability and wealth management channels. These pain points, frequently cited by industry participants, underscore the need for robust digital infrastructure and experienced partners.

Private market transactions often involve multiple intermediaries and bespoke deal structures. This leads to fragmented workflows, manual data entry and inconsistent reporting. General partners (GPs) have expressed concerns about the lack of centralised data management, which increases operational, regulatory and compliance risks.

While there is growing appetite from wealth managers to access private markets, the current infrastructure is not optimised for high-volume, retail-like distribution. Market participants have highlighted the need for streamlined onboarding, automated capital calls, lock-in period management at UBO levels and simplified fund classification to support different fund structures.

Connect all actors seamlessly

While private market funds can offer attractive long-term returns, their democratization requires a robust distribution process that connects operations with investors. For investors to access these markets, a comprehensive infrastructure supported by intermediaries is crucial. This includes platforms that connect all the actors involved in the process—GPs, distributors and investors. 

As is already being seen with the new-generation of tokenised investment funds, technology plays a vital role in simplifying the connections. By using more advanced digital services, technology-powered platforms create a shared, transparent space that enables real-time data exchange between GPs and intermediaries. For example, a shared platform can provide all participants with a detailed, up-to-date view of transactions, reducing inefficiencies and enabling seamless communication. By streamlining processes, technology allows for quicker, more accurate exchanges of information, ultimately reducing operational costs.

However, private market funds are not standardised in commercial terms and have unique characteristics that differentiate them from traditional vehicles. These include specific needs that must be carefully managed around capital calls and lock-ins and the management of disaggregated vs. aggregated positions.

Digital platforms make it easier to handle the investment workflows of a transaction lifecycle. For instance, capital calls can be automated and tracked in real-time, ensuring that investors are notified promptly and accurately.  Similarly, lock-in periods, a key feature of many private market funds, can be managed more easily through new tech, ensuring that the terms of the investment are adhered to.

The ability to track and manage disaggregated positions—where each investor holds a distinct portion of a fund—becomes much simpler, as the platform allows for real-time updates and accurate reporting. This eliminates the need for manual tracking and ensures that all parties have access to the same data.

Digitization and automation

Digitization is therefore key to advancing private markets. The innovations mentioned above can have significant implications for the liquidity and accessibility of private equity, real estate and infrastructure projects.

The existing private market fund distribution process involves many complex steps that can be time-consuming and error-prone when managed manually. Automation, powered by AI and machine learning, is addressing these inefficiencies by streamlining traditionally cumbersome processes such as investor onboarding, compliance checks and transaction processing. 

Automation tools allow asset managers to quickly process capital calls, manage investor profiles and handle subscriptions and redemptions without the need for manual intervention. By replacing manual tasks with automated workflows, these technologies help GPs scale their operations without increasing costs or staff. For investors, this means better, more efficient access to investment opportunities with fewer barriers to entry. 

AI-driven data analytics also enhances decision-making by providing general partners with insights into market trends, investor behaviour and performance indicators. This improves the targeting of specific investor segments, allowing for more personalised investment offerings and better risk management.

On the other hand, it is not just all about new tech. Regulation is playing an important role in facilitating the digital transformation of private markets. The introduction of frameworks such as ELTIF 2.0 in Europe is helping to address the barriers to retail participation by providing a regulatory structure that allows private market funds to be more accessible. 

ELTIF 2.0 has been specifically designed to attract retail investors by expanding eligible asset classes and reducing regulatory burdens. Digital technologies allow asset managers to comply with these regulatory requirements while streamlining operations. For example, KYC and AML compliance can be automated, reducing administrative costs and ensuring that all necessary checks are completed efficiently.

The future of private market funds

The key to the future for private market funds lies in a new distribution model. This means the integration of technology across all stages of the investment process. From asset origination to distribution and post-investment reporting, technology is making it easier for all parties to collaborate in a more efficient and transparent manner. 

As private markets continue to evolve, technology will play an increasingly important role in transforming how these funds are distributed. With the right infrastructure in place, benefiting from scale, network and expertise, private market funds can become more accessible, efficient and cost-effective, paving the way for their broader adoption across retail investor segments.

In conclusion, the digital transformation of private market fund distribution is opening up new opportunities for general partners and investors alike. By simplifying complex processes, enhancing transparency and reducing costs, technology is making private markets more accessible and efficient. With the support of regulatory frameworks like ELTIF 2.0 and the continuous advancement of digital solutions, the future of private market funds looks promising, poised for broader adoption and long-term growth.

The combination of FundsDLT’s digital innovation with Clearstream’s extensive experience in private assets aims to deliver a scalable, efficient solution tailored to the unique needs of private markets. Clearstream’s well-established network of global distributors and its infrastructure provide a powerful foundation to accelerate the adoption of digital distribution models in the wealth management space. This network not only ensures broad market reach but also reinforces trust and operational resilience across the investment lifecycle.

More information: Clearstream Private Market Solutions. https://www.clearstream.com/clearstream-en/funds-services/fund-centre/solutions/privatemarket

This article first appeared on Funds Europe website on 30.05.2025.