Outlook for 2025: Reflecting on key mega-trends

In 2024, Stephen McKenna, Chief Commercial Officer at Altum wrote a short article outlining his thoughts on the key trends for 2024. As we start a new year, I believe it is worthwhile to review how these trends have progressed and consider any additional insights that hindsight may offer.

Key trends

• The anticipated talent war
• Digitisation
• Inflation settling and interest rates dropping
• The retailisation of private assets
• Continued consolidation

From a macroeconomic standpoint, inflation has largely subsided, and interest rates are beginning to fall albeit slower than some might have hoped. Further cuts are still anticipated, and the consensus is that this should kickstart higher levels of activity as the cost of financing decreases and deals can be completed. Although levels of optimism vary from asset class to asset class and between geographies and geopolitical uncertainty still hangs over the recovery hopes.

Impact on talent wars

For the first time in a while it is probably more of an employers market, however, when the recovery does come we are likely to feel the impact of the talent wars. At Altum, we have continued to focus on recruiting high-quality teams ahead of the anticipated curve. Those who have not may find it challenging to service the increased deal flow if a wave of opportunity follows.

Continued consolidation in 2024

The trend of consolidation certainly continued throughout the year, both within the administration and asset management sectors. Discussions appeared to be ongoing between Blackrock and HPS after they had already acquired Global Infrastructure Partners earlier in the year.

Administration sector

In the administration space, Gen II acquired Crestbridge, and Apex acquired IP Management Company, Atlantic Fund Services, and Trustees Executors, among others, in 2024 alone. I still expect this trend to continue into 2025.

M&A activity in 2025

As M&A activity is expected to pick up in 2025, there are a number of administrators that have been looking to sell for a while, if rumours are to be believed. These could come to fruition in a busier market.

Asset management sector

Asset managers continue to want to offer their investors all asset classes, and I expect this to also continue. however, I think the development here will be the increase in partnerships. Apollo recently announced their partnership with Citigroup to create a $25bn private credit programme and BNP and Bl.

Partnerships and private wealth

Part of the appeal of such partnerships is the ability to give access to private wealth for alternative investors. This has been a hot topic in 2024 and was one of the trends I had highlighted with the retailisation of private assets.

It has been difficult to attend a conference this year in the alternatives space where retailisation or democratisation of private assets has not been a discussion topic. The update of products such as the ELTIF and the launch of new products like the ELTAF have been discussed extensively, so I won’t add to the word count on them, however, one area that is linked, which I didn’t specifically call out at the start of the year, is the impact of tokenisation.

Tokenisation and Illiquid assets

The major stumbling point for illiquid assets when they try to attract retail investors is the fact that they are illiquid. Tokenisation is a potential solution to this. By using Blockchain technology, illiquid assets can allow for increased liquidity, greater accessibility, faster and cheaper execution, and improved transparency. Effectively, it addresses all the barriers for wider access to alternative assets. There have been some earlier entrants in this space, but the potential is still largely untapped. We have seen the use of securitisations utilising tokenisation as an aggregator into private capital funds, and this could become a more well-established approach. Altum is well placed to help participants looking at such an option given our technology focus, highly skilled teams, and business agility.

Digitisation and Generative AI

The final trend was digitisation, and I think it is fair to say that this movement is firmly in motion. Perhaps the only addition to this trend would be some additional detail to include digitisation supported by Generative AI. Another hot topic on the conference circuit, and when we have hosted industry round tables have been contrasting views on where this impact will be most felt, although there is certainly agreement there will be an impact. We have looked to digitise as many manual processes as possible for some time now. One area we have fully rolled out is the digitisation of our onboarding process, an area that the industry had neglected for far too long. Our innovation team is looking in depth at how Generative AI can further improve these digitised processes, and I will be keen to expand further once the next phase moves past the exploratory stage

Here’s to 2025 and beyond!

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