Private Capital Is Rewriting the Rules of Global Finance 

A&O Shearman, the global law firm formed by the 2024 merger of Allen & Overy and Shearman & Sterling, published an analysis this week laying out what this shift means for corporate boards and the executives who have to navigate it.

The numbers tell the story clearly. Private capital firms, a category that includes venture capital, private equity, private credit, infrastructure funds, and sovereign wealth funds, are projected to manage roughly $18 trillion in assets by 2027. That is about twenty times what they managed at the start of the century. Meanwhile, there are now more than four times as many private U.S. companies with revenues above $100 million as there are public companies at that same revenue level.

The result is that companies no longer have to go public to access large pools of capital. Private credit funds have grown large enough to compete directly for deals that once required public bond markets or syndicated bank loans. The terms have converged too. Pricing, deal certainty, and flexibility are now the main differences between private credit and traditional syndicated lending.

Banks and private credit firms have also moved from competing to collaborating. The two are forming co-investment structures in sectors including commercial real estate, infrastructure, and corporate lending. Some banks are even financing private funds directly, ahead of those funds collecting cash from their own investors.

But the growth of private credit has drawn regulatory scrutiny. Several credit funds with heavy exposure to software and technology companies have recently moved to limit investor withdrawals, raising questions about liquidity risks. High-profile bankruptcies in the U.S. and the collapse of a UK bridging lender resulted in significant losses for private credit funds and investment banks alike.

A&O Shearman’s analysis is direct on the stakes: “For multinational businesses operating in this landscape, the imperative is clear. Capital strategy can no longer be siloed between public and private, or debt and equity, and capital raising decisions now require strategic consideration of geopolitical factors and governance impact.”

The geopolitical dimension is growing fast. The U.S. America First Investment Policy is steering capital toward domestic industries. The EU’s Security Action for Europe program is channeling private investment into defense. At the same time, investment screening regimes like CFIUS are restricting cross-border capital flows in technology and critical infrastructure. Sanctions, export controls, and trade disputes are further fragmenting global capital pools.

Regulatory reform is also pulling in different directions depending on the jurisdiction. The UK has simplified its equity issuance rules and lowered barriers for retail investors in bond markets. The EU is pushing to harmonize capital markets across member states. Japan and Singapore are giving shareholders more power. In the U.S., regulators are moving the other way, shifting rules in favor of corporate management over large institutional shareholders.

A&O Shearman says corporate boards need to treat capital strategy as a function that integrates legal, regulatory, political, and economic analysis together, not as separate tracks. Boards that build those integrated capabilities, the firm argues, will be best positioned to manage risk and find opportunity in a more complex funding environment.