Ratings: The Key to Unlocking Private Equity Opportunities

The revised regulation on European Long-Term Investment Funds (ELTIF), which came into force in January 2024, marks a turning point for private investors. For the first time, they have broader access to asset classes such as private equity, private debt, and infrastructure—markets traditionally dominated by institutional investors. These private market investments offer attractive return potential, but they also carry complexity, opacity, and long-term commitment. In this context, the role of ratings is not just helpful—it is fundamental.

A rating is far more than a simple score. It is an analytical tool that translates complexity into clarity. For private market products that are not traded on public exchanges, ratings provide the transparency that daily market pricing typically offers in listed investments. Without a visible market price, investors must rely on structured analysis to gauge the quality and risk of investment vehicles. Rating agencies like Scope help fulfill this role. In fact, Scope reports that 55 new ELTIFs were launched in 2024 alone—a sign of growing interest, but also of growing need for informed comparison.

Private equity, in particular, requires a deeper understanding. As Marc Tavakolian, Head of Investor Relations at ODDO BHF Private Assets, emphasizes, the importance of private equity investments remains significantly underestimated by retail investors. “The investable universe in private markets is larger than what is traded on stock exchanges,” he explains. While there are around 438 publicly listed companies in Germany that meet certain size criteria, there are over 16,000 private companies with comparable scale. This untapped potential can only be accessed through private equity—and ratings help investors navigate this terrain.

“The decision to pursue private equity is not just about meeting capital needs, which could also be covered by loans,” Tavakolian explains. “Private equity brings more than capital—it brings know-how, and it doesn’t involve interest payments. That makes it attractive not just to investors, but also to the companies themselves.”

This dual advantage—capital plus expertise—sets private equity apart from traditional financing. However, it also underscores the need for rigorous due diligence. Retail investors, now increasingly able to access these markets via ELTIFs, require tools to evaluate the long-term viability, risk, and return potential of these investments. Ratings offer exactly that: a framework for understanding where a fund stands in the market, how its strategy aligns with investor objectives, and how its underlying assets are expected to perform.

In a market that is rapidly expanding and growing more sophisticated, ratings act as a bridge between investor ambition and investment reality. They empower private investors to make informed choices in areas that were once the preserve of institutional players. As regulatory reform continues to open the door to private markets, ratings will become even more essential—not as a luxury, but as a cornerstone of responsible investing.