PE Without the Leverage or the Fund

The forecast

Speaking to Nicolai Tangen, head of Norges Bank Investment Management, a sovereign wealth fund mandated to invest only in public markets, the credit investor Marc Rowan extends an argument he had made once already, in an earlier appearance, into a forward call about equity itself: "I don't think change is going to stop at fixed income. I think it's coming for equity as well... you may not own private equity, but you will own equity that is private. You may, and many do already: they own Spotify, they own OpenAI, they own any number of tech companies that have remained private. Well, why should it stop there? I think there'll be fifty or one hundred companies that are private for which equity can be raised. Maybe that is the new form of active management, active ownership of companies, or private equity without the leverage and without the fund."¹ He is explicit about the timing: this is further out than the shift already underway in fixed income, which he expects to play out over the following five years. The forecast rests on a fact from elsewhere in the same conversation: roughly eight thousand US public companies have become four thousand, and about eighty percent of companies with more than one hundred million dollars in revenue are now private.¹

Unbundling private equity into its parts

The distinction being drawn is that private equity, as conventionally understood, bundles three separable things: the underlying equity in a private company, leverage used to amplify the return on that equity, and a closed-end fund wrapper carrying a general partner, fees, carried interest, and a roughly decade-long clock. Rowan's forecast keeps the first element and discards the other two: what remains is direct, unlevered ownership of a private company's equity, without the financial engineering or the fund structure historically bundled around it. Large institutions already hold companies such as Spotify and OpenAI, not through traditional buyout funds but through growth rounds and other direct or crossover vehicles, which is the evidence he offers that this unbundling has effectively already begun without anyone deciding on it as policy.

Why credit unbundles first

Rowan's account of the sequencing is the more analytically useful part. Fixed income splits first because a rating agency exists to certify that a given bond is investment grade regardless of whether it trades publicly or privately, converting the public-versus-private choice into a pure liquidity decision an allocator is permitted to make. Equity has no equivalent external gatekeeper: no rating agency can tell a portfolio manager that a private stake and a listed share carry the same risk, so an equity version of the same shift needs a different certification mechanism. On Rowan's own account this becomes a genuinely large project: standing infrastructure such as daily pricing, standardized identifiers, and active market making, aimed first at private investment-grade credit and only later, on his own admission not this decade's business, potentially extended to equity itself.¹

A different route to the same end

Vlad Tenev is building toward a comparable outcome by a different mechanism. Where Rowan's route is institutional market infrastructure, daily marks, standardized data, and dealer networks built up over time, Tenev's route is tokenization, letting continuous trading itself generate a real-time price for private company shares. Both men are, notably, in the business of selling the infrastructure each is separately predicting will be needed.

What it implies

Rowan's phrase, that public markets have become increasingly indexed and correlated rather than simply risky, functions as the backdrop for this forecast: as public ownership becomes more passive and more concentrated, he argues the activity historically called active management, forming a specific view about a specific company and acting on it, migrates toward private ownership, because that is where a differentiated view can still be expressed. It also quietly removes the need for leverage in the first place: a lower-return, lower-risk position of direct, permanent ownership in a strong private company does not require the leverage a traditional buyout fund's return target once demanded, making it closer to what a long-horizon institutional investor already does in public equities than to a classic buyout. What the forecast leaves unresolved is governance: continuous fundraising, standing valuation, and dispersed institutional ownership without listing requirements describe a public company in most respects except the listing itself, and no mechanism is offered for how fifty to one hundred companies with dispersed holders and no exchange rules would actually be governed.