The Surge of Private Markets in Europe
According to McKinsey’s Global Private Markets Report 2025, fundraising across private asset classes fell in 2024 to its lowest level since 2016. Yet despite lower fundraising, capital deployment—especially in private equity, private credit, and real assets—has increased by double digits as firms adapt to higher interest rates and cost pressures.
In Europe, demand from institutional and retail fund selectors for private market assets continues rising. A recent study by Neuberger Berman among European selectors shows a strong preference for private equity, and a notably sharp increase in allocations to private credit—from 19% to 47% year over year—to diversify portfolios.
Luxembourg’s Growing Role as a Private Markets Hub
Luxembourg remains central in Europe’s private markets infrastructure. Statistics show that total assets under management (AUM) for Luxembourg-domiciled investment funds (including UCITS and AIFs) stood at EUR 7,432 billion, up 8.78% over the prior 12 months.
Private equity and non-UCITS alternatives are a significant part of that growth. Luxembourg’s regulatory structure and fund architectures (SIF, RAIF, SCSp) continue to attract both fund managers and service providers. Ogier notes that Luxembourg has increasingly attracted insurance companies, family offices, pension funds, and high net worth individuals engaging in private equity strategies ranging from buyouts to venture capital-style deals.
Digital Trends in Asset Servicing
Semi-liquid and Long-term Fund Vehicles
State Street’s Transformative Trends in European Private Markets report (July 2025) reports that over half of respondents believe that at least 50% of future flows into private markets will come through semi-liquid vehicles like ELTIFs (European Long-Term Investment Funds) and LTAFs (UK: Long Term Asset Funds). These fund types are gaining traction due to investor demand for more liquidity and regulatory support.
Technology in Custody, Transfer Agency & Reporting
Service providers in Luxembourg are investing in digital tools for custody, transfer agency, and compliance reporting. Increasing regulatory requirements, operational complexity, and investor expectations drive demand for automation, secure API integration, digital audit trails, and reporting dashboards. The goal is reducing turnaround times, lowering errors, and improving transparency.
The McKinsey report highlights that managers are shifting from closed-end fund structures to evergreen or semi-liquid funds, which places pressure on asset servicing operations to deliver ongoing valuations, liquidity calculations, and investor communications more frequently.
Risks and Frictions
Institutions face several challenges: regulatory complexity, valuation transparency, illiquidity in private assets, and high operating costs. The McKinsey report noted that although capital deployment is up, deal-making remains muted in many asset classes due to macroeconomic headwinds.
Luxembourg-based service providers must also manage cross-border regulatory supervision, multiple reporting standards, and demands for enhanced ESG and risk disclosures.
Expertise and Role of Specialized Consultants
Effective digital transformation in private markets requires specialized skills: fund administration, compliance, technology architecture, data governance. Financial institutions often bring in external consultants for these capabilities. Platforms like We Put You in Touch connect clients with independent experts who cover these domains. This diversity of profiles allows for more rapid, reliable deployment of digital asset servicing solutions that meet regulatory, operational, and investor expectations.
References
- McKinsey – Global Private Markets Report 2025
- Neuberger Berman – European Fund Selector Study, 2025
- ALFI Luxembourg – industry statistics AUM & growth
- Ogier – Luxembourg private equity trends, mid-2025
- State Street – Transformative Trends in European Private Markets (July 2025)
- State Street – 2025 Private Markets Outlook: Luxembourg report.