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Prime time for private markets

The new value creation playbook

Investment continues to flow into private markets. In the wake of COVID-19, however, private markets managers face challenging economic conditions and a more complex definition of what constitutes value. As private markets come to make up an increasing proportion of the global capital markets, the sector is also becoming more regulated and scrutinised than ever before. 

While private equity is very much “the asset class of the moment” there is evidence that there are significant opportunities for growth and returns in areas such as real estate, infrastructure and private credit. The PwC report Prime time for private markets: The new value creation playbook outlines the moves that private markets will need to make to respond sufficiently to this changing value ecosystem.

Four PwC Belgium experts analyse the findings of the report and what they mean for four illiquid asset classes: real estate, private credit, infrastructure and private equity.

Real Estate A trillion-dollar Universe  Written by  Geoffroy Jonckheere  Partner, PwC Belgium

Real Estate A trillion-dollar Universe 

Geoffroy Jonckheere

At $3.1 trillion in assets under management (AUM), real estate is one of the largest alternative asset classes. Sustained growth in AUM has been driven as much by investor appetite as by strong asset-class performance. Investment doubled from 5% in 2005 to 10 % in 2020.

Despite the shock factor of the pandemic and economic uncertainty around the world, real estate remains strong due to the awareness that there may still be major opportunities in this industry. Furthermore, there is an inadequate supply to meet investor appetite amid a changing real estate environment. 

Investors’ desire for higher return strategies has grown. Value-add investments in direct and indirect real estate that involve significant redevelopment to increase returns are currently the most popular. And yet, investors remain under-allocated relative to their target goals. 

In the coming years, we will continue to see the trends and structural shifts that COVID-19 has accelerated such as

Real Estate A trillion-dollar Universe
  • Retail will continue to adapt, and some sections of retail are actually performing well. Neighbourhood retail seems to be holding strong, despite shutdowns and online shopping, because it offers everyday convenience to nearby residents.

  • Office space is not dead - office space is still a status symbol; will that change? Quite possibly but, at the end of the day, offices won’t be places we “must” be. They will be places we “want” to be, offering basecamp collaboration, coaching, communication, creativity and community. Most organisations recognise there is always going to be a need for office space. Maybe it will be less dense, ma

  • Logistic distribution is strong and will remain strong. Increased consumer demand for same-day and next-day shipping will force online retailers to not only occupy distribution hubs within close proximity of their customers, but they also need to hold more stock on-hand, potentially increasing their spatial needs. Eager investors will have a hard time finding deals in industrial real estate opportunities, but for investors fortunate enough to already own warehouses, high rent prices and low vacancy rates will be a lucrative opportunity.

  • Housing is a fundamental need, so there’s always demand – therefore residential has caught the eye of many investors as more and more of the population chooses renting over home ownership.

Private credit
Private credit Written by Thomas Deryckere

Private credit

Thomas Deryckere

In the past years, Belgium has shown a more limited emergence of private lending compared to its neighbouring countries, due to aggressive competition between the Belgian banks combined with a more conservative approach by lenders to their financing. The expected increase in business failures following the global pandemic will however bring increased pressure on banks' balance sheets and their ability to lend. This may lead to opportunities for private credit funds to finance businesses with a promising outlook. 

Additionally, given the amounts of dry powder in the market, secondary debt markets could further accelerate in the coming years, providing further opportunities for direct lending.

Infrastructure Written by Lieven Adams


Lieven Adams

COVID-19 has had little effect on some sub sectors of infrastructure (energy), but it has caused sharp decreases in revenue from once stable sources of return (airports). Similar to most developed markets, there are various redevelopment opportunities within Belgium to upgrade our current infrastructure. The limiting factor to these opportunities lies in the regulatory framework (subsidy systems, permitting process). This asset class does however still provide opportunities to create long-term stable returns when actively managed.

Similar to most developed markets, there are various redevelopment opportunities within Belgium to upgrade our current infrastructure
As the number of PE funds and Family Offices has grown over the last years
Private Equity Written by Philippe Estas

Private Equity


As the number of PE funds and Family Offices has grown over the last years, with professional fund managers being able to show good historical track records, they managed to grow the dry powder leading to a significant growth in demand for assets, additionally fuelled by low interest rates. 

On the supply side we expect PEs to sell parts of their portfolio companies to continue to show above par yields, but the real growth in assets supply is expected from strategic asset reallocation and portfolio reviews from corporates. Valuing assets in these uncertain times will be paramount to do deals - it takes 2 to tango - where the future value creation potential and the number of options available to create that future value will become paramount.

Projections for growth vary from $4.2tn to $5.5tn, depending on how global economic conditions respond to the disruption caused by the COVID-19 pandemic. Even in the worst case scenario growth is still estimated to be up by almost 50% by 2025.

Financial return is no longer the sole driver of private markets growth. ESG and Net Zero commitments now represent a significant source of value preservation and creation. This new value ecosystem requires a more intensive, interventionist and innovative playbook, focusing more on strategic positioning, operational excellence and capital efficiency.

Contact us

Geoffroy Jonckheere

Geoffroy Jonckheere

Partner, PwC Belgium

Tel: +32 475 91 08 29

Lieven Adams

Lieven Adams

Partner, PwC Belgium

Tel: +32 485 55 55 99

Philippe Estas

Philippe Estas

Partner, Deals - Transactions & Private Equity Lead, PwC Belgium

Tel: +32 477 27 07 50

Thomas Deryckere

Thomas Deryckere

Director, PwC Belgium

Tel: +32 47 478 0459

Connect with PwC Belgium