Rowan reframes public versus private markets as fundamentally about liquidity rather than risk.
“We now know public can be risky as well. We now have found out that private can be both safe and risky. What we're talking about is differing degrees of liquidity.”
Rowan calls this the golden age of annuities due to massive money flows into retirement services.
“Amazing amount of money flowing into retirement services, particularly annuities. I would say the golden age of annuities, but we are borrowed You think”
“2022 was a good opportunity for us to realize that public can be both safe and risky, and private can be both safe and risky. The only difference is a degree of liquidity.”
Rowan argues retirement systems know their liquidity needs for ten years and should get paid for illiquidity.
“Liquidity liquidity is a risk to everyone but in differing degrees. So if you are a retirement plan or a retirement system, you know your liquidity requirements for the next ten years.”
Rowan states public companies halved to 4,000 while 80% of large companies are now private.
“We now have 4,000 public companies. People think most of the action is in public markets. 80% of companies over 100,000,000 of revenue and 80% of employment is in private companies.”
Rowan credits Australia's superannuation success partly to giving public investors access to private markets under supervision.
“But a big part of the return, superannuation, the design of it was to give public investors access to private markets under professional supervision.”
Rowan claims Apollo's private markets plus guaranteed income offering is 60% better, not just 5-10% better.
“the outcome that we can offer with access to private markets and guaranteed income is not 5% better or 10% better, it's 60% better.”
Rowan challenges the perception that public markets are safe and private markets risky.
“We have a perception that what's public is safe and what's private is risky. But what if we're wrong?”
Rowan challenges the perception that public markets are safe and private markets are risky.
“We have a perception that what's public is safe and what's private is risky. But what if we're wrong? What if public is safe and risky and private is safe and risky?”
Rowan contrasts the private markets landscape forty years ago with today's more diversified options.
“Forty years ago, private was three products, Private equity, venture capital, and hedge funds. All can be good investments, but all have risk. And public were 8,000 public companies, diversified portfolios of stocks and bonds.”
Rowan suggests active management is evolving from trading securities to adding private markets to public portfolios.
“Maybe the new form of active management is not the buying and selling of stocks and bonds, but the addition of private markets to public beta portfolios.”
Rowan identifies retirement insurance companies and traditional asset managers as third and fourth markets now accessing private investments.
“We now have a third market, which is retirement insurance companies. People have seen what we have done by accessing private investment grade, and others are doing it. We now have a fourth market.”
Rowan notes the trend extends beyond AI to defense and other future sectors remaining private.
“And it is not just AI companies. The defense companies of the future, they're also still private in many instances.”
Rowan says private market capital enables companies to invest long-term without quarterly pressure or accessing public markets.
“I think what we're seeing is the availability of capital in private markets is allowing companies to do a series of things, to invest for the long term, not to be driven by quarterly earnings, and to obtain massive amounts of debt and equity to finance their business plan without accessing public markets.”
Rowan predicts large manufacturing and consumer companies will remain private in the future.
“It will not surprise me to have large manufacturing consumer companies that are private in the future.”
Rowan predicts a private company index will exist alongside the S&P 500.
“It will not surprise me that we end up with an S and P 500 index and an index of companies that are private.”
Rowan predicts individual investors will match institutional scale in alternative investments.
“I predict that individuals will be at least as big as institutions in their alternative bucket.”
Rowan predicts individuals will match institutions in size for alternative investments.
“All of a sudden, we have this second thing called individuals. And I predict that individuals will be at least as big as institutions in their alternative bucket.”
Rowan notes the major alternative asset managers grew from $40 billion combined in 2008 to nearly $1 trillion.
“I mean, we were the whole, the entirety of the companies that you see that are public today, everyone was 40,000,000,000 in 2008. We're now close to a trillion Blackstone more KKR, a little less.”
Rowan notes major tech companies like SpaceX and OpenAI remain private without concern from investors.
“We think nothing about private companies in growth and technology just staying private longer, and these are massive companies.”
Rowan notes major innovation companies like SpaceX, OpenAI, and Stripe all remain private despite US capital market strength.
“But I'll go through the companies who are creating massive change. SpaceX, Anthropic, OpenAI, Stripe, Cursor, Cognition, Andoril. What do all of them have in common?”