Britain's Financial Conduct Authority is encouraging firms that manage private assets to enhance their identification and disclosure of potential conflicts of interest in valuation processes, as retail investors are increasingly investing in non-public assets.
Britain is a key hub for private market asset management in Europe, experiencing a surge in global demand for private equity, venture capital, private debt, and infrastructure assets.
FCA Chief Executive Nikhil Rathi estimated that by 2024, global private capital assets under management had surpassed $14 trillion, triple the volume estimated a decade ago.
Private market assets are generally less liquid and transparent than publicly traded investments, making it challenging for investors to accurately assess their portfolio's value and liquidity.
In response to a recent multi-firm evaluation, Camille Blackburn, director of wholesale buy-side at the FCA, stated that managers could improve their efforts to identify and disclose conflicts and enhance valuation processes, particularly during market volatility.
The FCA recently notified firms that manage private assets of its plans to increase oversight on potential conflicts of interest to safeguard investor interests.