Finding the real winners in private markets’ biggest themes

Private-markets investors are increasingly drawn to the same set of powerful structural trends. Artificial intelligence, ageing populations, supply chain reshoring and digitalisation are reshaping industries across the global economy.

Yet identifying a compelling theme is only the starting point. For Chloe Brayne, head of private equity and unlisted assets at Colonial First State (CFS), the more important question is how those themes translate into sustainable investment returns across different asset classes.

“Every business plan references AI in some shape or form at the moment, but the key question is whether it’s embedded in the operating model or simply layered-on as a cost,” Brayne says.

For investors allocating to private equity and other unlisted assets, that distinction has become an important part of the due diligence process.

Looking beyond the AI narrative

Artificial intelligence has rapidly become one of the most widely discussed investment themes across private markets. Companies in almost every industry are highlighting AI capabilities as part of their growth strategy.

However, Brayne argues that investors need to look beyond headline narratives when assessing the real impact of the technology.

At CFS, due diligence increasingly focuses on whether AI genuinely improves productivity and operational efficiency. That involves examining not only the technology itself, but also the broader ecosystem supporting it.

“We look at the all-in cost when assessing AI adoption,” Brayne notes. “That includes the energy requirements, the cost of compute, the quality of the data and whether the organisation actually has the talent to use the technology effectively.”

Ultimately, investors want to understand how these inputs translate into measurable financial outcomes. Successful implementations typically generate either revenue growth or improved operating margins.

This analysis has also led CFS to take a cautious stance toward some of the most visible AI-linked sectors.

Not all data centres are created equal

Data centres have become one of the most prominent infrastructure themes linked to the growth of artificial intelligence and cloud computing. Global demand for computing capacity continues to rise rapidly.

However, Brayne believes the sector requires careful scrutiny, particularly as large volumes of capital flow into new projects.

“There will be some outstanding data centre investments, but not all data centres are created equal,” she observes.

Much of the difference lies in operational experience and asset management expertise. Data centre operators with long track records understand the capital expenditure requirements associated with technology upgrades and contract renewals.

By contrast, newer entrants attracted by the AI narrative may underestimate the complexity of managing these facilities over time.

Infrastructure constraints can also play a role. In Australia, for example, energy grid limitations may restrict the large-scale development of AI data centres compared with other global markets.

These factors reinforce the importance of disciplined asset selection within popular investment themes.

Selecting the right managers

While thematic trends often shape the opportunity set, Brayne emphasises that manager selection remains central to successful private-equity investing.

CFS maintains a detailed framework for assessing potential partners across its private markets program. This process evaluates both quantitative performance and qualitative factors such as team stability and investment discipline.

“We’re looking for managers that can deliver consistent returns over time and also offer opportunities for co-investment alongside their funds,” Brayne says.

Deployment pace is another important factor. Managers who invest steadily across market cycles can provide better vintage diversification for investors.

CFS also places significant emphasis on how returns are generated. The most attractive managers typically create value through operational improvements rather than relying solely on favourable market timing.

Understanding valuation discipline and exit strategies is equally important. Managers with strong track records of realising investments demonstrate that value creation can ultimately be converted into cash returns.

Structural themes beyond technology

While artificial intelligence dominates many discussions, Brayne believes several other structural trends are equally important for private markets investors.

One example is the ageing population across developed economies. Demographic shifts are creating long-term demand across healthcare services, infrastructure and property markets.

“Ageing populations are a powerful theme because they cut across multiple asset classes,” Brayne says.

In private equity, CFS is exploring businesses that support healthcare systems rather than owning physical healthcare facilities directly. Examples include health technology providers and companies managing complex hospital billing and reimbursement processes.

Infrastructure investments may include social assets such as rehabilitation centres, patient transport services or disability support infrastructure. These businesses often benefit from long-term demand and stable cash flows.

Property markets also reflect the demographic shift. In several major markets, supply of senior housing and specialised residential accommodation is expected to lag demand over the coming decade.

Navigating reshoring and supply chains

Another major structural trend shaping private markets is the reshoring of supply chains. Governments and corporations are increasingly prioritising domestic manufacturing and supply security.

This shift is influencing investment opportunities across multiple asset classes.

In infrastructure, Brayne says the trend favours assets with predominantly domestic revenue exposure. Logistics networks and digital infrastructure supporting local supply chains are becoming increasingly important.

Within private equity, industrial companies are emerging as potential beneficiaries. Many of these businesses have historically operated with outdated systems and limited investment.

As supply chains move closer to end markets, modernisation and productivity improvements can create significant value-creation opportunities.

Property markets are also responding to these shifts. While global trade hubs have historically benefited from international supply chains, reshoring trends may alter demand patterns over time.

Turning themes into returns

For investors, the challenge is not simply identifying powerful structural themes. Instead, the real work lies in translating those themes into sustainable investment outcomes.

Brayne believes this requires careful analysis across multiple dimensions, including manager expertise, operational execution and asset valuation.

Structural trends such as artificial intelligence, demographic change and supply chain transformation will likely shape the global economy for decades. However, the businesses and assets that ultimately capture that value may not always be the most obvious.