Over the past 12 months, the spotlight has been on the private markets landscape. It has undergone a period of recalibration shaped by evolving regulation, political disruption, shifting investor sentiment and renewed focus on compliance. While activity levels have remained robust across most sectors, the broader ecosystem has felt the push and pull of policy proposals, global uncertainty and heightened scrutiny around transparency, conflicts of interest, security and investor classification and protection.
Early in the year, one of the most potentially consequential regulatory developments in Australia was the focus on the definition and eligibility of the “sophisticated investors” criteria under the Corporations Act. For years, the designation of sophisticated or wholesale investor has served as a critical gateway to private market investment opportunities, allowing issuers to avoid certain disclosure obligations.
ASIC’s interest sparked concern among issuers, advisers and intermediaries, particularly with respect to the financial thresholds that determine eligibility and whether those thresholds remained fit for purpose. The possible reforms could have seen the bar raised significantly, potentially excluding many investors that have historically formed the bedrock of capital raisings in the unlisted private markets. In the final analysis it was determined that no changes were warranted or necessary at this stage. However, from a practical perspective, a flow-on effect has been an increase in internal legal and compliance reviews by market participants, with many companies adjusting their onboarding and investor verification practices to ensure strict compliance with existing regulations.
Following on from this and against a background of declining new IPO’s, ASIC announced a wide-ranging review of the private markets sector, with a particular initial focus on private credit. Public submissions have been received and ASIC is now in the consideration phase.
Adding further complexity to the capital landscape is the Australian Government’s current proposal to tax unrealized capital gains in certain superannuation funds. Although the proposal has yet to be implemented, the mere discussion of taxing paper profits has sent tremors through the investment community. What started as a trickle of concern before the federal election has, rightfully so, turned into a veritable tsunami of virulent criticism. Such a regime would strike at the very heart of private markets, where value is often reflected in long-term, illiquid holdings rather than regular liquidity events. For founders, investors, venture capitalists and private equity funds alike, the spectre of a tax obligation based on unrealized, theoretical valuation-based capital gains rather than actual cash exits is forcing a re-evaluation of deal structures, holding periods and even the appetite for growth-stage investing in unlisted illiquid assets. While the policy has not advanced to final legislation, the risk of future implementation and its extension beyond the current proposed superannuation regime has had a chilling effect on sentiment among key stakeholders.
In parallel to these domestic issues, the announced sale of the National Stock Exchange of Australia (NSX) to CNSX Markets Inc. (CNSX), the market operator of the Canadian Securities Exchange (CSE), highlighted the shifting sands in secondary market liquidity and access to capital for private and micro-cap companies. The NSX, which has long positioned itself as a venue for smaller and emerging enterprises, has faced persistent challenges in liquidity and relevance. Its acquisition by a large well capitalised and very experienced foreign investor has been seen as a positive step toward revitalisation and increased access to capital, particularly for smaller companies that have found the ASX a difficult environment in which to operate.
On the global stage, the outcome of the U.S. presidential election and its implications for trade policy has had ripple effects throughout the private investment landscape. Donald Trump’s return to political prominence, coupled with his strong rhetoric on tariffs and economic nationalism, has reintroduced uncertainty around international trade and supply chain dependencies. This had a particularly pronounced effect on Australian private companies involved in export-sensitive sectors such as agriculture, mining and steel and aluminium manufacturing. Investor caution has grown around any venture that relies heavily on global trade routes or is exposed to retaliatory tariff regimes. At the same time, Trump’s hawkish stance on China has continued to influence capital flows, with Australian fund managers increasingly looking for geopolitical insulation in the businesses they back.
Despite these headwinds, several themes have emerged as defining features of the private markets over the last year. The first is a strong and ongoing pivot toward mission-aligned capital, particularly in sectors such as private credit, climate tech, energy and digital infrastructure. Investors are seeking impact alongside returns, driving increased appetite for companies with measurable environmental and social outcomes.
Secondly, there has been a noticeable compression in valuations for early and mid-stage companies, especially in the technology sector. Following years of lofty pricing driven by low interest rates and abundant capital, the post-Zero Interest Rate Policy (ZIRP) environment has brought discipline back to private dealmaking. Founders are raising smaller rounds with tighter governance conditions, while venture capital firms are taking longer to deploy capital and are applying greater scrutiny to business models and paths to profitability. There is dry powder but there is less urgency to chase deals at inflated prices.
Finally, liquidity solutions and secondary trading of unlisted otherwise illiquid securities has gained momentum. With traditional exit markets such as IPOs and M&A activity showing signs of stagnation, investors are increasingly relying on secondary platforms to manage portfolio exposure. The development of a more structured and compliant secondary market infra structure in Australia, such as the PrimaryMarkets Platform, is beginning to mirror trends already established in the U.S.
The past year in private markets has been defined less by a single disruptive event and more by the accumulation of policy pressures, valuation adjustments and structural evolution. While the sector remains attractive for long-term capital seeking high-growth opportunities, the rules of engagement are changing. Investors and issuers alike are being challenged to operate with greater transparency, discipline and adaptability.
The Next 12 Months
The outlook for the next 12 months in private markets is expected to be defined by cautious optimism tempered by structural change. While macroeconomic stability remains uneven and regulatory reform looms large, the private capital ecosystem is adapting to a post-easy-money era with a renewed focus on quality, discipline and long-term value creation. Investors are repositioning themselves for a cycle in which capital is more expensive, due diligence is deeper, risk tolerance is recalibrated and regulatory oversight is enhanced.
Interest rates will remain a central influence. While central banks appear to have reached the peak of their tightening cycles, rate cuts are likely to be incremental and data-dependent. The implications for private markets are twofold: first, the cost of capital will remain higher than during the ZIRP years, forcing portfolio companies to prove capital efficiency and sustainable revenue growth; second, debt-linked transactions, such as leveraged buyouts, will continue to face headwinds, with lenders demanding stronger covenants and higher returns. Equity investors will favour businesses that can grow without relying on aggressive burn rates or repeated capital raises.
Fundraising conditions will continue to be competitive. General partners across venture capital, private equity and private credit are expected to adopt more targeted fundraising strategies, leaning on existing relationships and sector specialisation. In Australia, mid-market funds with local domain expertise and demonstrable exits are well positioned, while first-time managers or emerging strategies may find it difficult to attract institutional commitments without a proven track record or strategic edge. Investors will be looking for alignment of interests, fee discipline and portfolio construction that reflects a more challenging macroeconomic backdrop.
The regulatory landscape will continue to demand ongoing close attention. ASIC’s review of private markets is unlikely to fade quietly into the sunset and the question of sophisticated investor eligibility is not yet a dead issue. There is an expectation that private offerings of all kinds will come under greater scrutiny for advertising practices, risk disclosures, transparency, potential conflict of interest management and investor solicitation. Any movement on the proposed unrealised capital gains tax could trigger material structural shifts, particularly for those holding long-duration assets without near-term liquidity.
Geopolitical instability, led by U.S.-China tensions and the ongoing war in Ukraine and the Middle East, will continue to inform capital allocation decisions. The Trump White House is bringing renewed volatility to global markets and reigniting protectionist policies, tariffs and reshoring initiatives. Australian private market investors will be watching closely for changes in trade access, export regulations and defence-sector funding, especially in industries tied to strategic supply chains such as rare earths and clean energy.
Despite the cautious macro backdrop, certain sectors are poised to outperform. Energy transition remains a magnet for capital, with clean tech, battery materials and grid modernisation drawing strong institutional interest. In parallel, digital infrastructure including data centres, fibre networks and cybersecurity will continue to attract private capital amid sustained demand for resilient, high-capacity systems. Healthtech, aged care and biotech are also emerging as structural growth areas, reflecting demographic trends, a growing focus on an ageing population and the health and disability care systems under stress.
Private market platforms and secondary trading venues are expected to grow in relevance. As liquidity remains constrained and IPO markets stay selective, investors will increasingly rely on alternative liquidity mechanisms. Platforms such as PrimaryMarkets which offer structured secondary sales will be at the forefront of this shift. For issuers, this will mean more emphasis on transparency, regular reporting and investor relations, even in the absence of a public listing.
In summary, the year ahead in private markets will not be defined by exuberance, but by careful, strategic capital deployment. The reset of valuations, regulation and risk pricing that began last year will continue to shape a more mature and institutionalised private investment landscape. Those who adapt to the higher bar for transparency, governance and capital efficiency will find opportunities to scale, exit, or reposition themselves within a more selective yet resilient market.
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