Davis Polk partner Greg Rowland was quoted in Ignites discussing challenges retail investors face when they want access to private markets.

The article explained that limitations to co-investments are some of the biggest hurdles for these investors, and the SEC’s affiliated transaction rules require funds to apply for exemptive relief to engage with co-investment transactions.

Greg noted that exemptive relief requests are more likely to be granted if they are similar to applications that have already been approved, which limits “innovation and makes it challenging to incorporate new structures or strategies.”

There are no regulations that streamline the exemptive relief process for co-investments, he added. Therefore, managers are ultimately constrained in their ability to align private and retail fund portfolios effectively, which reduces access to private-market opportunities for retail investors.

“The Hurdles to Retail Access of Private Markets,” Ignites (November 21, 2024) (subscription required)

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