Orlando Bravo, co-founder and managing partner of Thoma Bravo, has drawn attention to the rapid growth of retail capital flowing into private equity, as the industry increasingly taps high-net-worth individuals to support long-term strategies and liquidity needs.

Bravo noted that retail investors are beginning to play a larger role in funding continuation vehicles – structures used by private equity firms to retain ownership of portfolio companies that are either hard to exit or still offer upside potential. “Retail could end up saving these companies that people cannot sell,” he said.

As traditional institutional investors face allocation limits, evergreen funds – open-ended vehicles allowing flexible subscriptions and redemptions – have emerged as an alternative route for capital inflows. These structures have helped fill the fundraising gap left by a slowdown in distributions and exit activity.

Bravo acknowledged that while institutional capital remains the cornerstone of the industry, access to retail wealth is becoming essential. “Ultimately there’s only so much money from the institutional community that you can access,” he said, noting that Thoma Bravo currently has no product targeting retail investors but sees strong momentum in the space.

According to Campbell Lutyens, evergreen funds paid 4% more on average than traditional buyers for secondary stakes last year. Evercore added that retail capital has bolstered pricing in the secondaries market, helping sustain deal activity amid wider market pressures.

Thoma Bravo, which manages over $179bn in assets and returned $20bn to investors over the past year, remains cautious about retail expansion. Bravo emphasised the need for careful structuring and investor education, stating: “The retail investors might not be as sophisticated. There might be more risk of them not understanding what they’re involved in and this could create all sorts of problems.”

Despite the concerns, the firm acknowledges the growing importance of private wealth in the private equity ecosystem, particularly in supporting assets that continue to offer strong long-term potential but face short-term liquidity challenges.

Source: Financial Times

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