Industry

Private Markets Asset Management — Understand the Playing Field, With Receipts

Partners Group does not make products, drill wells, or write software. It is a private markets asset manager: it raises long-dated capital from institutions and wealthy individuals, invests that capital into private companies, infrastructure, real estate, credit and royalties, and charges fees for managing it. The whole industry runs on one balance-sheet-light idea — collect a recurring fee on assets under management (AuM), then collect a slice of the profits when investments are sold well. Get that flywheel turning and you get a business that earned a 62.8% EBITDA margin on CHF 2,563 million of revenue in 2025 while employing roughly 2,000 people and tying up almost no capital of its own.

This tab teaches that arena from the ground up — the vocabulary, the economics, the cycle, the structural demand shift, and the competitive field — and backs every material claim with a click-through to the exact filing page that proves it.

The five words that unlock this industry. GP (General Partner) = the manager, i.e. Partners Group. LP (Limited Partner) = the investor who commits capital. AuM = assets under management, the fee base. Management fee = the recurring "rent" on AuM. Carry / performance fee = the GP's share of investment profit above a hurdle.

1. What this industry actually is

A private markets manager sits between two groups. On one side are clients (LPs) — pension funds, sovereign wealth funds, insurers, and increasingly wealthy individuals — who want exposure to assets that are not listed on a stock exchange. On the other side are private companies and assets that need capital and active ownership. The manager (the GP) raises pools of capital, deploys them, runs the assets, and ultimately sells them, returning cash plus profit to the LPs and keeping fees along the way.

Partners Group ended 2025 with USD 184.9 billion of AuM, up 21% year-on-year [1]. Two features make this a structurally attractive business:

• The revenue is rented, not sold. Management fees are charged as a small percentage of AuM, year after year, on capital that is typically locked up for years. Partners Group's management-fee margin has stayed inside a tight 1.18%–1.33% band since its 2006 IPO, landing at 1.24% in 2025 [2]. That stickiness is the bedrock of the model.
• The upside is shared, not borrowed. When investments are sold above a hurdle return, the manager keeps a performance fee (carry). In 2025 performance fees were CHF 819 million, 32% of total revenue [3].

Crucially, the manager invests clients' money, not its own. Partners Group runs a deliberately balance-sheet-light approach, putting only limited capital alongside clients [4]. That is why a ~2,000-person firm can steer USD 185 billion: the capital at risk belongs to the LPs.

Sources: AuM — 2025 Annual Report, Clients [1]; revenue and margin — Financials [5] [6]; performance-fee share — Financials [3].

2. The economic engine — two revenue lines, one very high margin

The industry's profit-and-loss has a simple, powerful shape. Revenue splits into a stable, recurring management-fee line and a lumpy, cyclical performance-fee line. Costs are dominated by people. Because there is almost no capital intensity, what is left over is an exceptionally high margin.

Source: 2025 Annual Report, Financials — revenue bridge, with performance fees rising from 19% of revenue in 2023 to 32% in 2025 [5].

The management fee is the "all-weather" engine: it grows roughly in line with average AuM and barely flinches with markets. The performance fee is the "fair-weather" engine: it only fires when assets are realized (sold) above a return hurdle, so it swings with the exit environment. In 2025 a better selling market pushed performance fees up 60%, and management deliberately funds the people who earn them out of that same pot — up to 40% of all performance fees are allocated to employees [7]. That design is what keeps the margin stable: when the volatile revenue line falls, the variable cost line falls with it.

Importantly, the performance-fee engine is diversified, not a single jackpot. Of more than 350 programs, over 80 contributed to performance fees in 2025 [8], which softens the lumpiness an investor would otherwise fear.

Walking revenue down to profit shows how little leaks out along the way:

Source: 2025 Annual Report, Financials — EBIT bridge and cost breakdown; EBITDA margin 62.8%, EBIT margin 60.1% [6].

Two takeaways an investor should carry into the rest of the report. First, people are essentially the only cost — personnel was 86% of operating costs — so this is a talent business wearing a finance costume. Second, the margin is a policy, not an accident: management targets roughly a 60% operating margin on newly generated fees [6], and the capital-light model converts that into cash that funds a rising dividend — proposed at CHF 46.00 per share for 2025, up 10% [9] — and drives a 55% return on equity [10].

3. The arena — five asset classes, very different economics

"Private markets" is not one market. It is a family of asset classes, each with its own return profile, cycle, and fee dynamics. Partners Group spans all five, which is itself a competitive choice: breadth lets it sell portfolios rather than single products. Here is the map, sized by AuM, with the long-run net return the asset class has delivered and the fresh client demand it attracted in 2025.

Sources: AuM and 5-year CAGRs — 2025 Annual Report, Clients [11]; 10-year net returns on realized direct investments — Investments, Portfolio performance [12].

What a newcomer should read off this table:

• Private equity is the heart of the industry — buying and transforming whole companies. It is the largest book (46% of AuM) and the highest-returning over a decade (19.7% net on realized direct deals), but its fees are the lumpiest because they depend on selling companies.
• Private credit is the fastest-growing industry-wide segment — lending to private companies. Returns are lower (mid-single digits) but steadier, and almost entirely floating-rate, so it benefits when base rates are high. The discipline that defines a good credit manager is saying no: Partners Group says it declined roughly 90% of prospective credit deals over five years [13].
• Infrastructure is the structural-growth darling — energy, digitization, data centers. It compounded AuM at 17.9% over five years and has earned ~20% net returns, riding what the firm sizes as a ~USD 9 trillion energy-and-modernization investment need [14].
• Real estate is the cyclical laggard — repriced hard by higher rates; most programs are not yet earning performance fees.
• Royalties is the new frontier — a cross-sector strategy (music, pharma, sports, energy) that Partners Group launched in 2024 and sizes as a USD 2 trillion-plus opportunity [15].

4. The cycle — this is not a steady-state business

The single most important thing to understand about private markets is that activity is cyclical even when AuM is not. A manager's AuM can keep grinding higher while the three things that drive it — fundraising (money in), investments (money deployed), and realizations (money returned, which triggers performance fees) — swing hard with the macro environment. 2021 was a peak; 2022–2024 were a multi-year hangover.

Sources: 2025 Annual Report — investments [16] and realizations [17]; fundraising history, Clients [1].

The recovery is uneven and still incomplete. Industry-wide fundraising in 2025 was down 4% year-on-year and 31% below the 2021 peak [18] — a useful reminder that the industry has not simply snapped back. What turned in 2025 was the exit side: realizations rose 47% to USD 26.0 billion as a better selling environment let managers harvest, and Partners Group's own investment volume rose 26% to USD 27.3 billion [16]. For an asset manager, a reopening exit window is the lever that converts dormant carry into cash performance fees — which is exactly what drove the 60% jump in performance fees this year.

Against that backdrop, the AuM line kept climbing — because committed capital is locked up and only slowly "tails down" as old funds wind up:

Source: 2025 Annual Report, Clients — AuM bridge; 2025 growth aided by USD 7.6bn of NAV performance and USD 9.5bn of FX, against USD 8.7bn of program tail-downs and USD 6.0bn of evergreen redemptions [1].

5. The structural shift — who buys private markets is changing

The industry's biggest growth story is not a new asset class; it is a new buyer. For decades private markets were sold almost exclusively to large institutions. Now the private wealth channel — wealthy individuals accessing private markets through "evergreen" (open-ended, semi-liquid) funds — is the fastest-growing pool of demand. The US private wealth private-markets market alone went from roughly USD 127 billion in 2022 to USD 337 billion in 2025, with private credit driving ~70% of that and growing at a 45% annual clip [19].

Source: Capital Markets Day (March 2026), Private Wealth — US private wealth market AuM, ~70% private credit and growing at a 45% CAGR since 2022 [19].

This shift reshapes the whole industry along two axes:

• From products to solutions. Increasingly, clients want a tailored portfolio across asset classes — a "mandate" or evergreen program — rather than a single fund. Partners Group leans into this hard: bespoke solutions (mandates plus evergreen) were 72% of 2025 fundraising, mandates are now 37% of AuM and evergreen 30% [20]. The firm frames the next decade as bespoke demand outpacing traditional funds, with industry AuM in its served segments roughly doubling toward 2033 [21].
• From closed to perpetual. Evergreen vehicles do not have a fixed end date, so the manager keeps charging fees indefinitely — but must manage redemptions, a liquidity risk that pure closed-end funds never had. Partners Group has compounded its private-wealth book at a 21% CAGR over 2015–2025, broadly tracking an industry growing north of 20% [22].

The prize the firm is underwriting is concrete: a base-case path to grow AuM to more than USD 450 billion over the next cycle (by 2033) [23], funded by USD 26–32 billion of new client assets expected in 2026 [24], and underpinned by long-term net return targets of 10–12% on established private equity strategies [25]. That return target matters because in private markets, performance is the marketing — the only durable way to keep raising capital is to keep delivering returns.

6. The competitive structure — a scale game with a long tail

Private markets is consolidating. Capital is concentrating in the largest, most diversified platforms because LPs increasingly prefer to give more money to fewer, proven managers. That dynamic favors incumbents with scale, multi-asset breadth, and distribution — and it sets the terms of competition Partners Group faces.

The listed comparables below are the names most often benchmarked against Partners Group. Read them with care: the US giants (Blackstone, Apollo, KKR, Ares) are far larger and increasingly built around insurance and credit balance sheets, a different model from Partners Group's pure, capital-light, equity-and-solutions franchise. The truest structural peers are the European managers — EQT and CVC — and Partners Group itself, which positions as one of the leading global private-markets firms with 30 years of history [26].

Sources: Blackstone USD 1,275bn [27]; Apollo USD 938bn [28]; KKR USD 744bn [29]; Ares USD 622bn [30]; EQT EUR 270bn [31]; Partners Group USD 185bn [1]. CVC total AuM not disclosed in the indexed filing.

The competitive forces a new investor should weigh:

• Barriers to entry are high. A multi-decade track record, the data to underwrite deals, and global distribution cannot be bought quickly. This is why consolidation favors incumbents and why fundraising is concentrating in firms like these.
• Switching costs are structural. Capital is locked into 10–12 year closed-end funds or perpetual mandates; LPs cannot easily move. That makes the management-fee base unusually durable.
• The threat is fee compression and crowding, not disruption. As more capital chases the same deals, returns can compress — most visibly today in private credit, where headlines about defaults are circulating. Partners Group's answer is selectivity and diversification: it points to a 0.08% loss rate and a ~100% floating-rate book in its credit portfolio [32]. Whether that discipline holds industry-wide is the open question of the cycle.

7. The watchlist — signals that would change the industry view

These are the few indicators that actually move the thesis for a private-markets manager. Most are visible quarterly in the filings cited throughout this tab.

Sources: realizations and fundraising — 2025 Annual Report [17] [18]; fee margin and redemptions — Financials and Clients [2] [1]; credit loss rate and wealth market — Capital Markets Day [32] [19].

The one-paragraph summary for a newcomer. Private markets asset management is a high-margin, capital-light, recurring-fee business with a cyclical profit-sharing kicker. Demand is shifting from institutions to wealth, from products to bespoke solutions, and from closed-end to perpetual vehicles — a structural tailwind that favors large, diversified, well-distributed platforms. The cycle turns on fundraising and, especially, the exit window that releases performance fees. Partners Group is a focused, pure-play example of the model: smaller than the US insurance-backed giants, but among the truest expressions of the private-markets-solutions franchise — and a clean lens through which to learn how the whole industry makes money.