Private Markets Enter a 'Believer's Market' Era

What's New

The surplus of capital chasing private market deals is a mirage created by a temporary deal flow drought, not a structural imbalance. In a conversation at the Goldman Sachs Alternatives Summit on the Alt Goes Mainstream podcast, Jeff Fine, Global Co Head of Alternatives Capital Formation at Goldman Sachs Asset Management, argued that capital is consolidating rapidly among the top five to ten managers while mid market firms run on fumes from legacy fees, and that the expanding universe of private companies will absorb the capital overhang as deal activity resumes. Fine, a 23 year Goldman veteran who spent two decades as a real estate investor before moving to capital formation, laid out why performance discipline, not product proliferation, will define which GPs survive the coming dispersion cycle.

Why It Matters

The prevailing narrative that too much money is chasing too few deals misses a structural shift: more companies are staying private, compounding value within private markets and expanding the investable universe. Fine's counterargument reframes the capital formation debate from a zero sum competition between channels to a growing pie story, but with a critical caveat: the benefits will accrue overwhelmingly to scaled platforms that invest in talent, technology, and transparent client relationships while mid tier generalists face existential fundraising pressure.

Memorable Quotes

• On what makes a great GP: "You have to first and foremost put investment performance and investment results at the top of your list ahead of business model growth, moving a stock price, proliferating new products. Everything you do has to be performance." Fine draws a direct line between the current wave of product launches and the risk that business building ambitions override investment discipline, the single factor he believes determines long term GP survival.

• On the capital surplus myth: "When you really do the math on capital relative to long term opportunity set, I'm not sure it's so out of balance. We just happen to have been in a period where deal volume was very low for a while." Fine challenges the consensus view that private markets are overcapitalized, arguing the perception is an artifact of the post 2022 deal drought rather than a permanent structural condition.

• On the mid market squeeze: "Many of them are running on fumes from fees that they're still charging on legacy products, on assets that they're holding while they're not able to raise new funds." Fine paints a stark picture of the bifurcation underway: top managers consolidating capital and talent while a large swath of the industry faces a fundraising wall with diminishing fee support.

• On staying invested: "Focus on the medium to long term. Stay invested. Don't try to time markets. It's about building exposure over time to great companies and great assets with managers that have been tested to weather cycles." Fine argues the approach to private markets deployment should mirror public markets discipline rather than the episodic, timing oriented allocation many LPs default to.

• On the customization trap: "If we said yes to every customized ask, we would wind up with an operational and cost infrastructure that would be unsustainable and in turn we would wind up delivering bad performance." Fine identifies the tension every scaled GP faces: meeting client demands for bespoke solutions without creating operational complexity that ultimately degrades the investment outcomes clients hired them for.

Big Picture Drivers

• Capital concentration: Fundraising is consolidating among the top five to ten managers while mid market generalists face existential pressure, creating a barbell dynamic where scale and specialization survive but the broad middle hollows out.

• Expanding private universe: More companies and assets reside in private markets than ever before, and that trend is compounding, meaning the investable opportunity set is growing alongside the capital base rather than remaining static.

• Deal flow recovery: The perception of capital surplus is primarily driven by depressed deal volumes since 2022, and as buyer seller gaps close and transaction activity resumes, the apparent imbalance should normalize.

• Channel convergence: Insurance companies, wealth platforms, and institutional investors are all increasing private markets exposure simultaneously, but each requires different product structures, risk profiles, and servicing models.

• Talent war escalating: The blurring of lines between investment professionals and distribution roles is creating demand for product specialists who combine investment acumen with client advisory capability, a scarce and increasingly valuable skill set.

By The Numbers

• $15–18T: Current estimated size of global private markets, still a fraction of the hundreds of trillions in public equity and fixed income markets.

• ~$3T: Private credit market size, with some estimates suggesting the addressable market could reach $20T to $40T when including asset based finance and adjacent strategies.

• 23 years: Fine's tenure at Goldman Sachs, spanning two decades as a real estate investor before transitioning to lead alternatives capital formation.

• Top 5–10: Number of managers Fine identifies as consolidating the majority of new capital, while the broader industry struggles to fundraise.

• 2022: Year Fine points to as the start of the deal volume drought that created the perception of structural capital surplus.

Key Trends to Watch

• Performance dispersion coming: As deal activity resumes and legacy positions are finally marked or exited, Fine expects significant separation between managers with genuine investment skill and those who benefited from market tailwinds, making benchmarking more consequential for LPs.

• Strategic partnerships replacing transactions: Institutional LPs are increasingly renting research, technology, and deal sourcing capabilities from scaled GPs rather than building redundant internal infrastructure, fundamentally changing the LP GP relationship from transactional to embedded.

• Credit as fixed income expansion: Fine advocates that LPs should evaluate private credit not just within their private markets allocation but as a complement to their broader fixed income portfolio, a framing shift that could dramatically increase the addressable capital pool for credit strategies.

• Believers market risk: The current environment is being driven by conviction in transformative themes like AI and infrastructure rather than value investing fundamentals, creating a market where participation feels necessary but downside buffers from cheap entry points are largely absent.

The Wrap

Private markets are entering a phase where the illusion of overcapitalization will give way to a more nuanced reality: capital is consolidating among a shrinking number of scaled platforms, the private company universe is expanding faster than most LPs appreciate, and the deal drought that created the perception of surplus is beginning to break. For LPs, the message is deceptively simple but difficult to execute: stay invested, diversify across strategies and vintages, partner with managers who prioritize performance over product proliferation, and resist the urge to time markets in an environment where transformative trends are driving valuations beyond traditional comfort zones.

Watch Full Episode: Goldman Sachs' Jeff Fine on Alt Goes Mainstream