The New Power Geometry of Private Markets

Large private-market deals are no longer controlled by a single buyout giant writing a giant cheque. Instead, they are now being stitched together by networks of sovereign wealth funds, private equity firms, family offices and institutional capital working in tandem.

In 2025, nine of the ten largest sovereign wealth fund transactions were co-investments with private equity firms — a structural shift that is reshaping how capital moves through global markets.

This transformation is becoming one of the defining features of the modern global investment economy, as explored in EBM’s coverage of Europe’s private credit boom, which is rewriting how companies raise growth capital across the continent.

Sovereign wealth funds are no longer passive

Sovereign wealth funds (SWFs) are rapidly evolving from passive LPs into active deal-makers. Rather than allocating capital into blind-pool funds, they increasingly want direct exposure to assets, lower fee drag and influence over strategy.

Co-investment gives them all three.

By investing alongside global private-equity sponsors, SWFs gain visibility into governance, capital structures and exit strategy, while retaining flexibility to scale positions up or down. In today’s volatile world — shaped by geopolitics, inflation and capital controls — that control has become critical.

As EBM has shown in its analysis of Europe’s emerging war-economy dynamics, capital is now being deployed with strategic intent, not just financial logic.

Family offices move up the capital stack

The same shift is playing out among family offices and ultra-high-net-worth investors. Once confined to small minority stakes, they are now participating in multi-billion-euro buyouts and infrastructure transactions via co-investment structures.

Alternative assets now account for roughly 44% of family-office portfolios, with private equity at around 21% and rising. In a world of fragile public markets, families are increasingly viewing private assets as the true store of long-term wealth.

That logic mirrors the trends shaping Europe’s broader economic outlook, where investors are repositioning portfolios around structural growth and financial resilience.

Co-investing allows families to avoid the fee drag of traditional funds while gaining exposure to assets once reserved for sovereign funds and pension giants.

Why co-investment is changing how deals get done

For private-equity firms, this shift is both an opportunity and a challenge.

Co-investment means deals must now be underwritten by multiple sophisticated investors, each with their own governance rules, approval processes and reporting standards. That adds friction — longer timelines, deeper due-diligence cycles and more formalised information flows.

The days of a single sponsor closing a multi-billion-euro transaction behind closed doors are fading. Today’s mega-deals require coalitions of capital.

This trend reflects the deeper restructuring of European finance described in EBM’s analysis of Europe’s new friction economy, where capital, regulation and geopolitics are colliding inside corporate deal-making.

The upside for fund managers

Despite the added complexity, co-investment is becoming a strategic advantage for fund managers.

Firms that can provide:

• Institutional-grade reporting

• Governance transparency

• Deal-by-deal flexibility

are now able to attract repeat co-investment capital from sovereigns, pension funds and wealthy families.

That creates a flywheel:
better co-investors → bigger deals → stronger track record → easier fundraising.

In a world where capital is becoming more concentrated and politically sensitive, trust and execution matter more than brand alone.

A new private-capital order is emerging

What is taking shape is a fundamentally new private-market power structure. Capital is no longer simply allocated; it is co-designed, co-deployed and co-governed.

Sovereign wealth funds are building internal deal teams. Family offices are underwriting alongside global sponsors. Private-equity firms are becoming capital orchestrators rather than lone wolves.

This mirrors the deeper realignment playing out across Europe’s financial system, as seen in the rise of private credit, defence-linked capital flows and strategic investment blocs.

In 2026, co-investment is no longer a trend.

It is the operating system of global private finance.

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