Private market investing is a long game, but for years, many investors treated it like a sprint. The goal was to get in, get quick markups, and cash out within five to seven years. That worked in a world where capital was abundant, markets were rising, and exits were predictable. But private markets don’t work that way anymore. The best-performing funds today aren’t the ones chasing quick exits. They’re the ones playing the long game.
There’s a reason why the smartest LPs and family offices are shifting their focus toward 10-year+ investment horizons. The data supports it. Buyout deals in India surged to $16.8 billion in 2024, a 39% year-over-year jump . These aren’t quick-flip deals. They are long-hold, value-building plays where firms take the time to restructure, optimize, and compound returns.
The compounding effect in private markets isn’t just about holding an asset longer—it’s about how capital gets recycled across multiple vintages. The most successful LPs don’t just commit to one fund. They reinvest DPI (Distributed to Paid-In) from earlier funds into new vintages, ensuring they stay exposed to compounding returns over decades.
Public market investors have always understood this. The biggest wealth creators—whether it’s Berkshire Hathaway, Temasek, or sovereign wealth funds—operate on decade-long horizons. Private market investors are now catching up. The best-performing PE and VC funds have realized that their edge isn’t in rapid deal-making but in patient, well-timed exits that maximize multiple-on-invested capital (MOIC).
For example, let’s take a typical PE investment cycle. If a fund exits in five years, it needs extraordinary growth to deliver a 3x return. But if that same fund holds for ten years, even a steady 15% CAGR can result in a much higher MOIC. The longer horizon allows for compounding at a natural pace, reducing the reliance on aggressive markups or favorable market timing.
This is why multi-fund strategies are becoming increasingly popular among sophisticated LPs. Instead of seeking returns in a single cycle, they reinvest distributions from earlier vintages into new ones. This approach creates a flywheel effect—capital compounds, risk is spread across time, and investors remain positioned for long-term market trends rather than short-term volatility.
Some of India’s top-performing private market investors are adopting this model. They’re not just looking for fast growth but sustainable value creation. And it’s not just in tech and buyouts. Infrastructure and real estate, once seen as slow-moving asset classes, saw $20.9 billion in exits in 2024 . These are sectors where patient capital is essential, and investors who hold for longer are benefiting from the compounding effect.
Long-term private market investing is a strategy. The funds that are structured for long-hold, high-compounding returns will be the ones that dominate the next decade.
It’s no longer about chasing IRR. It’s about building wealth that lasts.
Data Souce – EY-IVCA PE/VC Monthly trend analysis: December 2024
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