The private ownership industry is preparing to lobby the incoming Trump administration to provide it access to broad pools of capital it has not historically been allowed to tap, including retirement fund reserves, in a shift that could unlock trillions for their firms.
The $13tn industry is hoping the recent White House will revive a deregulatory push from the final months of Donald Trump’s first presidency, which allowed private ownership investments to be included in professionally managed funds.
Now, the industry is seeking to push history that first step, allowing responsibility-deferred defined contribution plans such as 401ks to back unlisted investments such as leveraged buyouts, low-rated private loans and illiquid property deals, industry executives told the monetary Times.
The executives said that the attempt could provide their higher-fee funds a chance to tap a class of investors with at least as much in assets as the sovereign affluence funds, pensions and endowments that have traditionally backed the globe’s largest groups such as Blackstone, Apollo Global and KKR.
Private ownership and non-traded real estate funds have generally been confined to institutional investors or wealthy individuals because they often carry higher borrowing, less liquid assets flow and fewer disclosures than traditional mutual funds and trade traded funds. They also generally carry higher fees and have act metrics that can be harder to assess.
“We’ll look for opportunities to allow the average investor, if they desire to, to diversify their capital collection and have the same access that wealthy individuals do to a private capital,” said one Washington lobbyist. “There are 4,000 publicly traded [US] companies. Most people are invested in the marketplace through those companies, but there are 25mn private companies out there.”
Industry executives told the monetary Times the deregulatory push was akin to “doubling demand” for the private capital industry’s various funds.
Marc Rowan, chief executive of Apollo, has called the trillions in assets held by US 401k plans an chance for his industry. He has raised concerns about concentration in index funds owned by retirement fund savers and questioned whether such investors must be confined to funds offering daily liquid assets flow.
“I jokingly declare sometimes, we levered the entire retirement fund of America to Nvidia’s act. It just doesn’t seem intelligent. We’re going to fix this and we are in the procedure of fixing it,” Rowan said at an Apollo occurrence this autumn. “In the US, we have between $12tn and $13tn in 401k plans. What are they invested in? They are invested in daily liquid index funds, mostly the S&P 500, for 50 years. Why? We don’t recognize.”
Wealthy individuals have flocked to private real estate and lending funds managed by Blackstone, Apollo, HPS and Owl Rock among others in search of higher yields and spread into companies not available to community economy investors. A record $120bn flowed into such funds in 2024, according to private funds data specialist Robert A Stanger & Co.
However, some private ownership industry executives worry retirement fund savers will not have the ability to discern between credible funds and fly-by-night entrants chasing lucrative fees. They recommend private investments should be directed by fiduciaries, rather than individuals selecting funds directly themselves.
The deregulatory window was opened by Eugene Scalia, son of the late Supreme Court fairness Antonin Scalia, during the late stages of the first Trump administration. Then acting as head of the labour department, Scalia’s agency issued an Information note in June 2020 that allowed private ownership investments to be a part of retirement fund-oriented holdings such as target date funds and balanced funds.
“Adding private ownership investments to such professionally managed property funds would boost the range of property opportunities available to 401(k)-type schedule options,” the department said at the period.
The concept was supported by Jay Clayton, then chair of the financial instruments and trade fee, who joined the board of Apollo after leaving office.
Lobbyists and private capital groups are now researching how they can advance Scalia’s efforts into mass self-directed investments. Scalia, who joined law firm Gibson Dunn after Trump’s first presidency, successfully challenged the Biden administration’s efforts to boost disclosures and regulations for private economy funds.
“We’ll make the case for a pro-growth regulatory regime that supports tiny businesses and provides more chance to everyday investors,” said Drew Maloney, head of the American property Council, the private capital industry’s main lobbying throng in Washington.
PE executives depend the incoming administration will be less adversarial to private dealmaking, which was a central target of President Joe Biden’s antitrust authorities.
“We’ll hit the ground running to work with the Trump administration,” Maloney said.
