The Changing Face of Alternatives: Tokenisation and The Future of PE

As traditional capital raising becomes more complex and technology rapidly continues to evolve, the private equity sector is undergoing a metamorphosis, with diversification and tokenisation at the heart. As Elliot Refson, Head of Funds at Jersey Finance, explains as part of this series, the opportunity for private equity managers who get it right is considerable…

After more than a decade of robust growth, asset managers in the alternatives and private investment sector are being challenged like never before and on multiple fronts. Investor, structural, and product diversification are all colliding with technology – the rise of tokenisation in particular – prompting managers to readjust their strategies.

In addition, many institutional investors, such as pension funds, have already met their target allocations to alternatives, while the downturn in IPO activity has impacted momentum.

At the same time, large institutional allocators have increasingly been turning to innovative investment vehicles over traditional fund structures with co-investment vehicles, funds of one and managed accounts, not only being adopted by institutions but are also finding growing use among private capital managers targeting the high value retail market.

Such shifts have led asset managers to look beyond their traditional institutional investor base in particular towards family offices and high-net-worth individuals (HNWIs), with JP Morgan and Bain research highlighting that while only 5% of HNWIs were currently allocating to alternatives, over half (53%) planned to increase their exposure.

The rise of blockchain and tokenisation – and independent yet intrinsically linked phenomenon – is poised to respond to this trend, and significantly democratise access to those private markets. Add in greater adoption of AI technologies and the picture, as is outlined in research recently published by Jersey Finance with IFI Global, is resoundingly one of a sector in transformation.

Breaking barriers

Historically, family offices, high-net worth investors and smaller institutions could only access private markets via pooled funds, but the rise of tokenisation stands to change that picture dramatically.

While blockchain enables secure, transparent, and efficient trading of real assets, potentially improving liquidity and reducing investment minimums, tokenisation, in particular, is seen as a game-changer.

Through breaking down barriers for family offices and private investors by offering more flexible, liquid, and transparent entry points into traditionally illiquid asset classes such as private equity, as well as infrastructure and real estate – without the burden of excessive fees – tokenisation is providing a greater degree of investment control.

Over time, this could also extend to retail investors seeking fractional exposure to private markets, heralded as the democratisation of the sector.

The potential impact, therefore, on private markets is considerable. We have already seen impressive growth in this space – the AUM of tokenised assets globally, for instance, stood at US$5.2bn in 2022, rising to US$8.5bn in 2023. In 2024, that figure almost doubled to US$15.7bn, and in 2025 has jumped further, increasing to US$25.3bn (as at August 2025, RWA.XYZ).

This is echoed by thought leaders such as McKinsey, whose research has projected that tokenised market capitalisation could reach as much as $2 trillion by 2030, and EY-Parthenon, which found that HNWIs plan to allocate an average of 8.6% of their portfolios to tokenised assets by the end of 2026.

As with the breaking of any new ground, however, there are still hurdles to overcome.

For instance, accessing alternatives can be complex, opaque, and expensive while deal sourcing often depends on personal networks and advisory relationships. Additionally, high minimum investments and liquidity constraints can deter new investors.

Regulatory uncertainty too remains a major concern, with 24% of HNWIs citing it as a significant barrier.

Nonetheless, the momentum behind tokenisation, together with technological acceleration and the scale of opportunity, suggests that it will play a central role in the future of private equity, and meaningful innovations are already emerging to address the challenges.

Inclusive future

It is clear that the major shifts underway in private markets, driven by innovation in both structuring and technology, are enabling managers to bring fresh products to new audiences like never before.

At the same time, investors will benefit from unprecedented access to a broader and more diverse range of strategies and structures.

Jersey is ahead of the curve. As a funds centre, Jersey has listened carefully to the new generation of investor decision maker; a generation who are digital natives, and who are not only comfortable with virtual systems, but are demanding them.

Just over a year ago, the Jersey Financial Services Commission (JFSC) introduced updated guidance on the tokenisation of real-world assets – a move that was warmly welcomed by Jersey’s funds industry. Since then, it’s been pleasing to see industry embrace the opportunities presented by the tokenisation of virtual assets and bring a growing number of tokenised solutions to market – as will be highlighted at our next Funds Focus in London.

With such a respected regulatory framework, a comprehensive suite of fund vehicles, a strong focus on innovation and a world-class digital infrastructure (Jersey has one of the fastest fibre broadband speeds anywhere in the world), Jersey is already supporting such strategies while building a leading reputation in digital assets and tokenisation.

At this midpoint of the decade, the future of private investing looks more open and dynamic – an evolution that Jersey is fully committed to driving that offers investors and advisers a wealth of new opportunities to explore.

This article was originally published on The DrawDown.