In a market environment characterized by persistently higher interest rates and greater public market volatility, many investors are rethinking the traditional role of fixed income. As part of that reassessment, general partner (“GP”) stakes (i.e., minority investments in the management companies of private capital firms) have emerged as a differentiated private market solution.  

We believe GP stakes can offer qualified investors the opportunity to access durable income streams, participate in the growth of private market platforms, and diversify risk exposure beyond traditional private equity investments.¹ 

“Think of GP stakes as owning a share of the business behind the investments. Instead of relying on any one fund or deal, you are participating in the long-term growth and profitability of a manager’s entire platform. For clients seeking durable income, portfolio diversification, and alignment with institutional trends, this strategy can offer access to the economics that drive private market returns — without taking some of the direct company-level risk.” –Jeremy Wenner, Senior Managing Director at IEQ Capital. 

What are GP Stakes? 

GP stakes refer to minority ownership interests in the general partner entities that manage private equity, credit, or real asset funds. Unlike traditional private market fund investments, GP stakes provide exposure to the business of asset management itself. Investors in GP stakes may receive a share of: 

• Recurring management fee income, 
• Carried interest (performance-based fees), and 
• Balance sheet value growth and affiliated business revenue.⁵ 

This access to contractual, recurring fee streams, with upside optionality from performance-based fees, can offer private equity-like returns with greater potential stability and predictability across market cycles.² 

Why Investors Are Re-Evaluating GP Stakes Now

• Structural Growth in Private Markets: Private capital continues to expand as an asset class, with global private market assets under management projected to reach approximately $25 trillion by 2032.³ As more institutional and individual capital flows into these markets, the enterprise value and cash flow generation of established asset managers may grow alongside.
• Compelling Entry Environment: A slower fundraising landscape in 2024 created liquidity challenges for many GPs, prompting an uptick in GP stake transactions. A record 141 transactions were completed in 2024, nearly doubling the activity from 2023 and surpassing the previous peak set in 2021.⁴ We believe this dislocation has created opportunities for investors to negotiate more favorable terms and access otherwise closely held GPs.
• Demand for Strategic Capital: GPs are increasingly seeking flexible, long-term capital to support platform expansion, succession planning, and entry into new verticals. GP stake investments also allow founders to retain control while aligning long-term incentives with their minority partners. These partnerships often go beyond just a capital investment, by providing support in fundraising, talent retention, and operational scaling from a minority investor’s experience across other GP platforms.² 

Characteristics of GP Stake Investments 

• Contractual Cash Flow: GPs typically earn management fees calculated as a percentage of committed or invested capital across multiple fund vintages. These fees represent recurring, predictable revenue streams. Investors in GP stakes participate in a portion of these fees which are often distributed as income, offering yield that is structurally distinct from traditional portfolio company investments.² 
• Performance Participation: In addition to fee income, certain GP stake investments include rights to a share of carried interest earned by their underlying fund vintages. While this income is more variable and contingent on fund outcomes, it can provide meaningful upside and allows investor returns to scale with platform success.² 
• Diversification Across Strategies and Vintages: GPs typically manage multiple funds across asset classes, strategies, and vintage years. As a result, investors in the management company can gain exposure to a diversified stream of economic interests, which we believe may reduce return volatility relative to a single fund commitment.² 
• Enterprise Value Appreciation: As GPs grow assets under management and expand into new markets, the value of the management company can increase over time. We believe GP stake investors benefit from this enterprise growth, providing a potential capital appreciation component to complement income generation.² 

 “In our view, GP stakes offer a compelling risk-adjusted profile by combining contractual fee-based income with scalable exposure to private market AUM growth. As allocators continue to seek uncorrelated income, minority stakes in high-performing GPs can represent a strategic way to access structural growth in alternative asset management.” –Mike McIntosh, Chief Market Strategist at IEQ Capital.  

Risks to Consider: GP stakes, like all private market investments, carry specific risks that qualified investors must evaluate. Liquidity Risk: GP stakes funds are generally long-duration and illiquid, with no defined exit timeline. Various potential exit mechanisms for GP stakes are still nascent, and investors should not rely on a GP Stakes fund for future liquidity needs.² Manager Correlation and Macro Risk: Investment outcomes depend on the long-term performance and fundraising ability of GPs. Private asset management firms are meaningfully correlated to one another, and performance is at least partially driven by factors outside of GP control, including broader macroeconomics and capital markets conditions.² Carried Interest Volatility: Underwriting returns from carried interest is uncertain and may not be realized in part or in full, being inherently variable and tied to market cycles and fund performance.² Tax Considerations: A portion of GP stake income may be taxed as ordinary income, which can impact net returns.² Tax laws pertaining to GP ownership stakes are also subject to change, and any preferential tax treatment available to GPs (including those related to carried interest income) may be eliminated in the future.* 

Why It Matters for UHNW Families   

For UHNW investors, GP stakes can potentially: 

• Provide contractual fee income with long-term visibility. 

• Offer exposure to private market growth without direct company-level risk. 

• Diversify portfolio income sources beyond traditional fixed income. 

• Align investor outcomes with the expansion of institutional-quality GP platforms. 

When executed thoughtfully, GP stake allocations may help create durable income streams and compounding exposure to private market growth, supporting wealth preservation and continuity across generations. 

IEQ Capital’s Perspective 

We believe GP stakes can serve as a complement to fixed income allocations within diversified portfolios, particularly for investors seeking private market exposure without taking on narrower company-level risk. These investments provide access to contractual revenues, platform growth, and aligned upside through performance incentives. 

Given today’s volatile macro backdrop, we believe sophisticated investors may be able to access high-quality GP platforms at more attractive valuations. When underwritten thoughtfully, with a focus on manager quality, alignment, and governance, GP stakes may offer a long-term solution for generating income and capturing secular growth in private markets investing.² 

We invite you to speak with our investment team to explore how GP stakes may align with your portfolio objectives. 

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1. AQR & Quantinno Ad-hoc Client Questions, IEQ Capital, 2025. 

2. Enhanced Tax Loss Harvesting – AQR, IEQ Capital, Q2 2025.

3, Private Markets Outlook, Ardian, March 2025. 

4. GP Stakes Transactions Report, PitchBook, Q4 2024. 

5. Global Private Equity Report, Bain & Company, 2025. 

GP Stakes

• Competitive Risk: There are a few large incumbent firms and many new entrants to GP stakes investing, which may limit the ability to find attractive deals or price them attractively. 
• Concentration Risk: GP stakes portfolios may be more concentrated by underlying GPs, when compared to a traditional PE fund. 
• Liquidity Risk: GP stakes are typically structured as a perpetual vehicle with no defined exit mechanism and may rely on IPO markets for exit. 
• Macro Risk: The fee-earning ability of underlying portfolio companies is contingent on investment performance, which may vary materially across a market cycle. 
• Tax Risk: A large share of returns may be taxed as ordinary income, such that returns net of taxes may be materially lower than pre-tax returns. 

*IEQ Capital, LLC does not provide tax or legal advice. You are strongly encouraged to consult with qualified tax and/or legal counsel to evaluate the potential tax implications associated with this strategy. 

Past performance is not indicative of future results. An investment represents a high level of risk.  An Investor should be prepared to bear the risk of a total loss on his/her investment. An investment on behalf of other clients in a specific asset class does not mean that it is a suitable or advisable investment for you. IEQ typically charges different fees for different asset classes and thus may have an incentive to recommend certain asset classes over others. Forward looking statements/return projections are not statements of facts but merely an expression of opinion and belief. You are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. Nothing herein constitutes investment, legal, tax, or other advice.