How private equity’s pioneer in tapping retail money lost its edge
From Switzerland, Partners Group built a $185bn business by serving individual investors. Bigger US rivals have the market in their sights
Private equity’s most successful advocate for opening up the once-exclusive asset class to the American masses is a firm not headquartered in New York, Washington or indeed in the US at all.
From its base on the outskirts of Zug, 4,100 miles away from the centre of US policymaking, a Swiss investment colossus built a $185bn business by serving wealthy individuals products they could sell in and out of with ease.
Like other private equity firms, Partners Group was hindered by US rules in serving America’s giant retirement market: an untapped source of demand that had the potential to be hugely lucrative, and one that Partners was determined to unlock.
Last August it succeeded, with US President Donald Trump’s executive order to make 401k savings accounts accessible to private equity.
But the firm that pioneered private equity for the people may not be the one to reap the rewards.
The victory came as Partners found itself suffering for the first time net redemptions at its flagship US fund and with new competition from rivals that have set their sights on the marketplace it developed.
Where groups such as Blackstone, Apollo and KKR previously wooed institutions to lock up capital for a decade, the $22tn private capital industry is now switching to a battle for the wealthy individuals and retirement savers that long formed the bedrock of Partners’ business.
“[Partners] invented the wealth market, but where are they really today with all these others launching products?” said one former senior employee.
At Partners’ headquarters, giant Victorian lettering reads “Built differently to build differently” from one of two mock 19th-century warehouses. The site is meant to embody an investing culture that prioritises industrial knowledge over financial engineering — a deliberate contrast with the US private capital powerhouses.
Partners’ heritage is different, to a point. Unlike most buyout groups, established by seasoned dealmakers, Partners was founded 30 years ago by three young Goldman Sachs alumni with backgrounds in sales and private banking.
Marcel Erni, the group’s cerebral founder, focused on investments. Fredy Gantner, a Mormon bishop, was chief executive. The lowest-profile founder, Urs Wietlisbach, led sales.
Their expertise was not in striking deals but in serving clients, something that would be crucial to the firm’s development.
What Partners recognised early was that there was a lack of private equity expertise among Swiss and German investors, presenting a sales opportunity. It made smart use of its Swiss roots, according to industry insiders, forging deep ties with local private banks such as Vontobel that gave the firm a base of potential clients willing to pay lucrative fees.
They were “serving the underdog that no other firm wanted to serve”, one former employee said. While it did some of its own buyouts, Partners primarily invested in others’ funds. “They hated when you called them a fund of funds but that’s effectively what they were,” said a former adviser.
Because Partners lacked a steady pipeline of direct deals to offer clients, it was forced to come up with other structures to fit their needs. “That innovation gene was there out of necessity,” another former worker said.
That led to an innovation that would propel the firm’s success: a new type of fund that packaged private investments in a way that suited individuals and small institutions: the evergreen or “semi-liquid” vehicle.
Partners does cater to traditional private equity investors, both through closed-end funds and separately managed accounts operated for institutions. But in 2003, it became the first large firm to offer buyout investments to mainstream investors.
That was the start of a remarkable run. Within a decade of a US version launching in 2009, Partners had captured more than two-thirds of the American retail market for private markets funds, according to Goldman Sachs, while rivals were focused on making money from prestige clients such as pensions and sovereign wealth funds.
Partners combined its new structure with another innovation: its willingness to tailor its product to suit its clients, rather than adopting the take-it-or-leave-it approach more common to its buyout group peers.
For institutions, the firm’s use of separately managed accounts allowed investors to focus on specific strategies or regions of their choosing. The result is a structure of dizzying complexity, according to advisers, with more than 350 vehicles that can participate in deals allocated by algorithm to give everyone a share of the action.
Partners said this flexibility was core to its appeal, providing each client “equal access” to its deal flow based on a “pro rata allocation policy”. But it is difficult to assess the performance of many of Partners’ funds because the firm does not publish the individual returns of its separately managed accounts.
“They’ve always been prepared to do things a bit differently,” said a former private markets equities analyst. “There was an element of them being a pathfinder.”
In 2006, Partners became one of the first private markets firms to go public. “They felt having a public quotation would give them more credibility,” said one adviser on the initial public offering.
US rivals Blackstone, Apollo and KKR followed suit. While some bosses, such as Blackstone co-founder Stephen Schwarzman, complained about stagnant public market values in the ensuing decade, Partners’ shares soared.
The consistency of its management fee income attracted shareholders in Europe, even as Blackstone and Apollo struggled to win over investors thanks to the unpredictable timing of lucrative deal windfalls. “They weren’t going public as Europe’s KKR,” the adviser said. “The story was primarily that they were a substantial [investor] in all sorts of funds.”
That changed after the IPO. From 2011, the firm started to focus more on originating its own deals, a move that frustrated some buyout groups that found one of their fund investors had turned competitor.
Any such tensions were no longer an issue, Gantner told the FT.
Instead, it is Partners’ US rivals that are increasingly occupying its traditional territory.
As commitments to the sector from big institutional backers have slowed, Blackstone, Apollo and KKR have started to aggressively target individual investors. With new funds and armies of staff, these US rivals have seized market share.
Last year, investors for the first time pulled money overall from Partners’ main private equity fund for wealthy US investors as it underperformed newer offerings from its better-known competitors. Redemptions from the $16.5bn Private Equity Master fund accelerated in 2025, reaching a record of $750mn in the third quarter — roughly double the figure for the same quarter a year earlier.
By November, the Swiss firm’s share of the US market had fallen to less than 25 per cent, according to Goldman.
Partners’ funds risk becoming increasingly unattractive, according to Patrick Dwyer, a US wealth manager, as rivals such as Blackstone have used their larger deal pipelines to create funds for individuals with broader investment offerings and lower overall costs.
While the Swiss group’s stock outperformed its US-listed competitors in its first dozen years as a public company, it has lagged badly over the past five years. In 2018, the Swiss group had a market value roughly equal to Apollo and KKR combined. Now, it is less than a third of the size of either.
“It is an uncompetitive product compared to the newer funds,” Dwyer said of Partners’ flagship evergreen fund structure.
The Swiss firm — whose flagship retail fund in the third quarter underperformed “almost all other evergreen funds we track”, according to Goldman — insists that the fund, which accounts for 9 per cent of its overall assets, remains attractive. It offered investors greater transparency and regulatory standards than newer competitors, Partners said.
The firm’s assets increased by $33bn in 2025, and it has said the nine new evergreen funds launched since 2023 are attracting assets and performing well.
But weak returns at its flagship US and European retail funds have been a drag.
The main US master fund, which soared in value in 2021 and 2022, has returned between 2 and 8 per cent a year after fees in the period since. That is lower than newer offerings from KKR and Blackstone, though the firm believes the comparison is unfair, given that the new crop of funds are investing after a reset in private valuations.
Recent returns have also been below the fund’s own 11 per cent annualised net return since 2009, however. Partners’ “global value” fund for European investors, which has more than $9bn in assets, has also generated tepid annual returns of between 0.3 and 8.3 per cent over the past four years.
The group’s head of portfolio solutions, Roberto Cagnati, said higher reported returns elsewhere in the industry had limited grounding in reality.
“Many of the industry’s newer funds are doubling in size every few quarters, with investments entirely based on book value and no track record of realisations,” he said. “Any fund that launched after 2023 has had the benefit of a markedly different investment environment following the fast rate hikes in 2022.”
“There is a lot of apples-to-oranges comparison going on when people look at private equity evergreen performance today,” Cagnati added.
Partners’ traditional closed-ended funds have performed better. It has had some successful deals at a time when other private equity groups have struggled to exit investments. It last year sold a stake in International Schools Partnership after tripling its value in four years; its 2024 listing of retail brand Vishal Mega Mart returned seven times Partners’ investment, according to a person familiar with the firm.
But the firm admits that, like the wider buyout industry, some of the assets it bought in 2021 and 2022 now look overpriced. A deal for watchmaker Breitling came just before a slowdown in the global market for Swiss watches, while a portfolio company acquired in 2018, Hearthside Food Solutions, collapsed in November 2024 after allegations of child labour.
“[Partners has] very strong guidance on performance fees for this year and 2026 and 27 because they have some old direct investments maturing . . . But . . . what’s next? What’s beyond 27-30?” said one private banker.
In the meantime, Partners must manage redemptions at its flagship evergreen US fund, its single biggest source of fees. Net redemptions at its US fund are running at about $320mn a quarter, or nearly 2 per cent of its net assets.
Together with two evergreen funds favoured by European investors, the three have collectively suffered billions of dollars in net redemptions in recent years after previously recording almost uninterrupted growth.
Partners said it had conservatively managed liquidity, setting aside assets to meet redemptions. It said it had also guarded against growing too quickly by sometimes turning away new assets and sought to keep investors’ expectations for returns in check.
Rekindling growth may hinge on whether the firm can win in the market for US savers that it helped pioneer.
To try to keep its edge, Partners has struck deals with asset managers including BlackRock and PGIM to expand its customer base.
Nicholas Herman, equity analyst at Citi, said that despite the “growing narrative” last year that relatively weaker performance and demand in the firm’s big evergreen funds could cause Partners to fall behind, the firm had been able to successfully strike deals and launch newer strategies in part thanks to its much “longer-term track record”.
Its rivals have similar ideas, however. Blackstone has a partnership with Vanguard, while KKR and US investment giant Capital Group have an exclusive venture. Apollo is building new retail products that promise to “be a reimagination of what private equity is as an industry”.
Partners could also bulk up to help it compete. It has told shareholders it expects to be a buyer as the private capital industry consolidates, and has been searching for a signature deal — or “a brand that is compelling for investors”, as chief executive David Layton told the FT in August.
Discussions with Advent International and Leonard Green came to nothing and Partners has moved on to studying smaller deals that would add closer to $50bn in assets, according to people familiar with the matter. (Advent and Leonard Green declined to comment.)
Layton told the FT it was normal for his firm to be losing some share of the market it invented.
“We were doing the missionary work to create something, and now you have this kind of wave that’s building,” he said. “There’s obviously going to be a lot of new entrants . . . But it’s clear there’s structural growth there and Partners Group has a big role to play.”
