Private capital has been one of the hottest parts of the financial services industry in recent years, with investors and employees flocking to the sector. But despite that growing profile, private markets group Hamilton Lane says it still needs to do plenty of on-the-job training when new graduates walk through the door.
“There are more classes dedicated to private markets, but it’s a bit behind,” says John Stake, head of portfolio management at the Pennsylvania-based group. “You still spend a lot of time teaching those individuals.”
The gap reflects how quickly the industry has changed. Stake says private markets teaching has traditionally centred on private equity buyouts, but the industry has diversified faster than the curriculum, especially in venture capital and private credit.
Preqin forecasts that the global alternatives industry will grow from $16.8tn in assets under management at the end of 2023 to $32tn by 2030 — a surge that is pushing business schools to expand teaching in private equity, credit and other alternative assets.
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Much of this shift is playing out in masters in finance programmes, which are adapting their courses to reflect the growing importance of private markets.
At New York’s Columbia Business School, students have been clamouring for classes in private equity and private credit, pushing the school to build a structured private equity curriculum and expand capacity in classrooms, says Michael Ewens, professor of finance.
Even for students who do not go on to work in private markets, Ewens says the industry matters more than ever. “Private equity and alternatives, in headcount [are] not huge. But [they touch] so much of the financial and real economy,” he adds.
Expansion has taken different forms. At Imperial College Business School in London, areas such as private credit have largely been folded into existing courses rather than driving any wholesale redesign of the curriculum, says James Sefton, head of finance.
Instead, core modules have been updated, with industry practitioners brought in to teach specialist courses, including former executives from JPMorgan Chase and KKR. There are limits to what can be taught in the classroom, Sefton adds, with much of the training still happening in the market.
Other schools have embedded private markets more deeply in their training. At Edhec Business School in France, private markets have shifted from a niche elective to a core part of the finance curriculum, with a sharper focus on deals and financial modelling.
“It’s not a side topic you add to a curriculum, it really matters,” says associate professor of finance, Laurent Deville. Students need to understand not just valuation, but how investments are put together and run, he adds.
Schools are adding more classes in response. Much of the expansion in private markets teaching has been bottom-up, driven by student demand rather than any top-down overhaul of the curriculum.
“We have more classes than a few years ago — we’re beefing up,” says Steven Kaplan, professor of finance and entrepreneurship at the University of Chicago Booth School of Business.
At Chicago Booth, teaching spans private equity, restructuring and corporate governance, alongside classes on deal structuring and the legal side of deals.
Beyond the typically lucrative pay, many students are drawn to private markets for the direct impact of their work and their closeness to underlying projects, says Weina Zhang, associate professor of finance at the National University of Singapore Business School.
At NUS, that interest is tied to areas such as energy transition, where projects rely heavily on private capital. NUS has responded with specialised courses in private equity and venture capital, and a masters in sustainable and green finance.
In Asia, where private capital markets are less developed than in the US and Europe, Zhang adds, training focuses more on attracting investment to new projects. “We have to focus a lot on the viability of projects and the risk-return trade-off.”
To meet the demand for education, schools are also looking outside academia. Some are turning to industry bodies; Laura Merlini, EMEA managing director of the Chartered Alternative Investment Analyst Association, says universities need to plug gaps in expertise and bring in real-world training.
“Business schools are coming to us because what we offer is not theoretical; it’s based on the hands-on experience of professionals,” she says.
Merlini says membership of the CAIA Association, which represents more than 15,000 members across over 100 countries, is growing at double-digit rates, with about 6,000 candidates in the pipeline for its certification.
That growth reflects surging interest among students. Imperial’s Sefton says that in some cohorts, up to 40 per cent of students want to work in private markets, although entry straight out of business school remains highly competitive.
At the same time, the hiring model is changing. Hamilton Lane’s Stake says private markets firms are starting the recruitment process far earlier, in some cases hiring candidates years before they begin full-time work as they compete directly with investment banks.
The firm is building out its undergraduate recruitment programme to compete head-on with banks for talent. Stake says: “It’s so competitive, people are getting offers before they start at a bank for their next role in PE. That’s why you see that evolution.”
