Private markets have become a strategic allocation for institutional investors. Private equity, infrastructure and private debt are now embedded in long-term portfolios rather than treated as peripheral exposures. 

What remains less understood is how fundamentally different these investments are to manage. The risks are not always visible, but they are structural. 

Private markets change how risk behaves 

In listed markets, investors typically have continuous pricing, visible liquidity and frequent external validation. They can adjust positions relatively quickly, and valuation is externally validated in real time. 

Private markets operate differently. Capital is committed over long horizons, liquidity depends on underlying events, and pricing is inferred through valuation processes rather than continuously observed. This shifts the focus from market timing to governance, process and judgement. 

There is no pricing. The industry relies on relatively stable pricing to pass ownership – and private markets don’t give you that.”  – Cami Mbulawa, Head of RisCura’s alternative investment services (00:44 – 00:53)  

A lack of continuous price discovery is a structural feature of private markets, shaping how valuations are interpreted, how liquidity is planned and how governance decisions are made. 

The risks are known – but often misunderstood 

Three risks consistently define private market investing, yet they are often treated independently rather than as a system. 

• Valuation risk – outcomes depend on models and assumptions  

• Liquidity risk – capital cannot be accessed on demand  

• Manager selection risk – performance varies widely across managers  

These risks interact over time, influencing how portfolios evolve and how outcomes are realised. 

If somebody tells you the value is X, you have to hope it doesn’t deviate too far – because it has implications for your portfolio and your IRR.” – Cami Mbulawa (05:11 – 05:25)  

Risk is not removed, it’s managed 

A common misconception is that these risks can be engineered away. In practice, they are made investable through structure, oversight and discipline. 

Valuation frameworks have become more sophisticated, incorporating multiple inputs and independent checks. Manager due diligence has deepened, moving beyond track record to include governance and operational capability. 

Liquidity is increasingly treated as a design variable within portfolios, rather than a constraint that emerges later. 

Structure, governance and coordination are becoming central 

As allocations to private markets increase, the need for structured approaches becomes more pronounced. 

Valuation, manager selection and liquidity management cannot operate in silos. They require coordination, supported by governance frameworks and, increasingly, shared expertise across the investment ecosystem. 

In practice, this has led to more integrated models where independent valuation, due diligence and portfolio-level oversight are aligned. This reflects how the market is evolving, with frameworks such as alternative investment services emerging to bring these components together in a more consistent way. 

More on this approach: https://riscura.com/what-we-do/alternatives-and-impact/ 

Manager selection is where outcomes concentrate 

In private markets, dispersion between managers can be significant. Access to deal flow, execution capability and governance all influence outcomes. 

This creates a tendency for capital to concentrate with established managers, which can reduce perceived risk but also narrow the opportunity set. At the same time, expanding the pipeline of managers remains critical to deepening the market. 

As explored in RisCura’s perspective on private equity development:
https://riscura.com/insights/articles/empowering-future-private-equity-leaders/ 

Further context on the private equity landscape and access dynamics can be found here:
https://brightafrica.riscura.com/private-equity/ 

Liquidity requires deliberate design 

Illiquidity is often framed as a disadvantage, but it is a defining feature of private markets. 

Capital generally cannot be withdrawn on demand. Exits depend on underlying events such as asset sales, refinancing or listings, and those events do not always align neatly with investor reporting or cash-flow needs. 

The impact of this depends on how well private market commitments are aligned with investor time horizons, liability profiles, pacing plans and broader portfolio requirements. 

From access to capability 

The evolution of private markets investing is subtle but significant. 

As private market allocations mature, investors need the internal and external capability to manage valuation, liquidity and manager oversight consistently over time.  

This capability is defined by the ability to interpret valuation, assess managers and align liquidity with long-term objectives across cycles. 

Nobody can go back and collect 20 years of data… time is the moat.” – Cami Mbulawa (27:33 – 27:38)  

Over time, experience compounds. What begins as complexity becomes structured knowledge, shaping how investors engage with private markets and how outcomes are ultimately delivered.

FAQ  

What are the main risks in private markets?
The key risks are valuation risk, liquidity risk and manager selection risk. These risks are interconnected and shape outcomes over the full investment lifecycle. 

How do investors manage liquidity in private markets?
Liquidity is managed by aligning investment horizons with liabilities, structuring portfolios appropriately and ensuring sufficient liquid assets alongside private market exposures. 

Why is valuation more complex in private markets?
Private markets do not have continuous, observable pricing in the same way listed markets do. Valuations rely on models and assumptions, making governance, consistency and independent