As public fixed income markets continue to face rate volatility and lower real yields, we are seeing ultra-high-net-worth (UHNW) investors exploring alternative income strategies within private markets.

Among these strategies, GP stakes, which are minority ownership investments in private asset management firms, have emerged as a differentiated approach to private markets income generation. GP stake investors can potentially gain exposure to recurring management fee income, carried interest participation, and long-term platform growth tied to expanding assets under management (AUM).¹

What are GP Stakes?

GP stakes refer to minority ownership interests in the general partner or management company of a private capital firm. These firms may manage private equity, private credit, infrastructure, and/or real asset strategies.

Unlike traditional private equity investments, which rely on the performance of specific portfolio companies or individual fund vintages, GP stakes provide exposure to the broader economics of the asset management platform. Investors may participate in recurring management fee income, performance-based carried interest, enterprise value appreciation, and growth across future fund vintages and strategies.² GP stakes offer potential diversification across multiple vintages and investment strategies, reducing dependence on any single fund’s performance and enabling participation in the economics of a broader, more diversified set of underlying funds and assets.

Recurring Fee Income vs. Carried Interest

A defining feature of GP stakes is the distinction between recurring management fee income and variable carried interest income.

Management fees are generally contractual-like revenues earned across multiple funds and strategies, potentially creating diversified and durable cash flow profiles.² Carried interest, by contrast, is tied to investment performance and realized profits, making it more variable and dependent on market conditions and fund outcomes.² Together, these revenue streams can create a hybrid profile that blends income generation with long-term capital appreciation potential.

From a tax perspective, GP stakes may differ from many traditional income-oriented investments. While management fee-related cash flows may be taxed as ordinary income, distributions tied to realized carried interest may be eligible for long-term capital gains treatment. As a result, a portion of cash flow may be taxed at lower rates than ordinary income. Tax outcomes will vary based on investment structure, investor circumstances, and applicable tax law.

Key Growth Drivers in the GP Stakes Market

In our view, several structural trends have contributed to growing interest in GP stakes strategies.

Global private market assets under management have expanded across private equity, private credit, infrastructure, and real assets, with industry estimates projecting the market could exceed $24 trillion by 2029.⁴ As private platforms scale, management companies may benefit from growing fee-related earnings and diversified business lines.

At the same time, some private asset managers may be seeking strategic capital partners to support succession planning, expansion, and operational growth. Minority ownership structures may allow founders to monetize a portion of their business while maintaining alignment and control.³

GP Stakes as a Private Markets Income Strategy

While GP stakes are not traditional fixed income investments, some investors evaluate the strategy as part of a broader income-oriented allocation framework.

In our view, this is largely driven by several structural characteristics:

• Recurring fee-oriented cash flows
• Long-duration contractual capital
• Diversification across multiple funds and vintages
• Reduced reliance on public market direction²
• Potential tax-efficiency benefits

Importantly, GP stakes carry materially different risks than traditional bonds. These investments are generally illiquid, long duration, and dependent on the continued success and fundraising ability of the underlying management company, among other risks.

Potential exit pathways may include secondary transactions, strategic sales, recapitalizations, or long-term ongoing cash flow distributions. However, investors should not assume a predictable terminal liquidity timeline.²

Why We Believe It Matters for UHNW Families

For UHNW families evaluating differentiated private market income strategies, GP stakes may provide exposure to several long-term structural themes tied to the continued institutionalization of alternative asset management.

Potential portfolio considerations may include:

• Diversification beyond traditional fixed income
• Exposure to recurring fee-based revenues
• Participation in private market platform growth
• Access to diversified economics across multiple strategies and vintages
• Potentially favorable after-tax cash flow characteristics

When integrated thoughtfully within a diversified portfolio, GP stakes may complement traditional income strategies while providing differentiated exposure to the business economics of alternative asset management firms.

IEQ Capital’s Perspective

At IEQ Capital, we believe GP stakes represent a differentiated private markets strategy centered on long-duration fee-based cash flows and participation in the growth of alternative asset management platforms.

In our view, disciplined underwriting remains essential. Evaluating manager quality, fundraising durability, governance structures, and alignment incentives is central to understanding the long-term characteristics of these investments.

Sources

1. Bain & Company. (2025). Global Private Equity Report 2025.
2. PitchBook. (2024). GP Stakes Transactions Report.
3. Blue Owl Capital. (2024). GP Strategic Capital Industry Overview.
4. Preqin. (2025). Future of Alternatives 2029.
5. McKinsey & Company. (2025). Global Private Markets Review.

The views and opinions expressed are current as of the date indicated, and IEQ does not undertake any duty to update the information set forth herein. The information contained in this document does not constitute an offer to sell or the solicitation of an offer to purchase or sell any securities, including any securities or alternative investments recommended by IEQ.

This material is for informational purposes only and does not constitute investment, tax, accounting, or legal advice. IEQ Capital does not provide tax or legal advice. Investors should consult their own advisors regarding their specific circumstances.

This document is for informational purposes only and is intended exclusively for the use of the persons to whom it is delivered and the information provided therein may not be reproduced in its entirety or in part, or redistributed to any party in any form, without the prior written consent of IEQ Capital, LLC (“IEQ” or “IEQ Capital”). Information contained in this document is current only as of the date specified in the document, regardless of the time of delivery or of any investment, and IEQ does not undertake any duty to update the information set forth herein. Regarding alternative investments, any such offer or solicitation may be made only by means of the delivery of a confidential private offering memorandum which will contain material information not included herein regarding, among other things, information with respect to risks and potential conflicts of interest. Alternatives involve varying degrees of risk and are not appropriate for all investors. No representation is made that any client will or is likely to achieve its objectives, that IEQ Capital’s strategies, investment process or risk management will be successful, or that any client will or is likely to achieve results comparable to any shown or will make any profit or will not suffer losses or loss of principal. Investing involves risks. Diversification neither guarantees a profit nor protects against risk. You should not construe the contents of this document as legal, tax, investment or other advice. Any tax-related decisions should be made after conducting such investigations as the investor deems necessary and consulting the investor’s own legal, accounting and tax advisers to make an independent determination of the suitability and consequences of a composite election.