Family Offices’ Surge into Private Credit and Infrastructure: A Strategic Pivot in a Shifting Investment Landscape
The global investment landscape is undergoing a significant transformation, with family offices—private wealth management advisory firms serving ultra-high-net-worth individuals—leading the charge. These entities, which manage the fortunes of some of the world’s wealthiest families, are increasingly turning their attention away from traditional private equity and toward private credit and infrastructure investments. This strategic pivot is driven by a combination of factors, including the declining allure of private equity, the search for stable yields, and the need for inflation protection. As family offices reallocate their portfolios, they are reshaping the investment landscape and setting new trends for the broader financial world.
The Decline of Private Equity’s Appeal
Private equity (PE) has long been a cornerstone of alternative investments for family offices, offering access to high-growth companies before they go public. However, recent years have seen a marked decline in the attractiveness of PE investments. Deal and exit values have stagnated, with the exception of certain regions like the Asia-Pacific, leading to lower returns and fewer attractive entry points. High valuations, limited liquidity, and a backlog of “dry powder”—capital waiting to be deployed—have further compounded the challenges faced by PE investors.
Macroeconomic uncertainty, persistent inflation, and volatile public markets have amplified the search for assets that offer a balance of income, inflation protection, and diversification. In this context, private credit and infrastructure have emerged as compelling alternatives. These asset classes provide family offices with the stability and yield they seek, while also offering opportunities for long-term growth.
The Rise of Private Credit
Private credit has experienced a remarkable surge in popularity among family offices. According to recent research by BlackRock and KKR, over one-third of family offices plan to increase their allocations to private credit in 2025 and beyond. This asset class, once a niche dominated by specialist hedge funds and institutional managers, has matured significantly in recent years. Family offices are now recognizing its potential to deliver attractive risk-adjusted returns.
One of the key drivers behind the rise of private credit is the retreat of traditional banks from certain lending markets. Regulation and risk aversion have caused banks to reduce their exposure to mid-sized companies and real assets, creating a financing gap that private lenders have been quick to fill. Private credit investments, often structured as loans with floating rates, allow investors to capture a premium over public bond markets. Additionally, the senior-secured nature of these loans and the robust controls embedded in private lending agreements provide a greater measure of security in an uncertain economic environment.
The numbers support this trend. Worldwide, private debt fundraising has reached new highs, with family offices allocating significant portions of their portfolios—up to 42% in some cases—to these investments. As family offices continue to seek stable yields and downside protection, private credit is likely to remain a key component of their investment strategies.
Infrastructure: A Safe Haven with Growth Potential
Infrastructure investments offer family offices a unique combination of stability, inflation protection, and long-term growth potential. Over 30% of family offices polled expect to increase their allocations to infrastructure in the upcoming investment cycles. This enthusiasm is driven by several factors, including the inflation-hedging properties of infrastructure projects, the alignment of these assets with societal megatrends, and the illiquidity premium they offer.
Infrastructure projects, such as renewable energy, utilities, and transportation, often have regulated or inflation-linked cash flows, making them particularly attractive during periods of rising prices. Additionally, the global push toward net-zero emissions, the growing demand for AI and data infrastructure, and population-driven urbanization are creating persistent needs for new infrastructure. Family offices view these assets not only as defensive but also as aligned with secular growth trends.
The geographic distribution of infrastructure investments reflects family offices’ global perspective. Asia, North America, and Europe have all seen rising deal activity in renewables, digital infrastructure (data centers, fiber), and transportation. As the world’s digital appetite strains existing foundations, family offices are positioning themselves to capitalize on the infrastructure imperative driven by AI and cloud computing.
The Broader Context: The Flight to Alternatives
The shift toward private credit and infrastructure is part of a broader trend among family offices: an exodus from public equities and cash. Family offices have increased their average allocation to alternative assets to over 40%, and for some, over half. Public markets have lost their luster due to volatility, while rising interest rates and geopolitical uncertainty have made diversification more urgent.
Private markets offer several advantages over traditional asset classes, including lower correlation, higher yield, and—at least theoretically—reduced volatility. However, these benefits come with their own set of risks, such as illiquidity and complex due diligence. Family offices must carefully weigh these trade-offs as they navigate the alternative investment landscape.
Why Family Offices Move Faster
Unlike large institutional investors, which are often constrained by bureaucracy and slow decision-making processes, family offices enjoy greater agility and a longer investment horizon. They answer only to their founding families, allowing them to make swift and opportunistic decisions. For example, a family office might reallocate 10% of its assets in a single board meeting, whereas an institutional pension fund might take years to approve a similar reallocation.
This independence is also reflected in family offices’ willingness to back emerging managers and niche strategies within private credit and infrastructure. By identifying and investing in promising but less well-known opportunities, family offices aim to achieve outsized returns and gain early-mover advantages.
AI, Data, and the Infrastructure Imperative
A specific trend driving infrastructure allocations is the exponential rise of artificial intelligence and cloud computing. The digital transformation is placing immense strain on existing infrastructure, creating opportunities for investment in data centers, energy grids, subsea cables, and water systems. Family offices recognize that AI has significant infrastructure needs, and they are positioning themselves to capitalize on this trend.
Some family offices now view infrastructure not just as a defensive allocation but as a growth play. The critical role of infrastructure in supporting digital transformation and new economic paradigms makes it an attractive investment for family offices seeking long-term growth.
Risks and Trade-Offs in the New Alternative Landscape
While the shift toward private credit and infrastructure offers numerous benefits, it is not without risks. As more capital flows into these asset classes, concerns about overcrowding and compressed returns are growing. Additionally, the illiquidity of private markets can be a significant challenge in volatile times.
Complexity and governance are also important considerations. Private credit and infrastructure investments require specialized due diligence and hands-on oversight. Family offices must be prepared to navigate legal and regulatory pitfalls and ensure that their investments are properly valued. Valuation discrepancies can be particularly problematic, as the methods for marking these loans or infrastructure equity stakes to market are far less precise than for public securities.
Looking Ahead: The Rise—and Testing—of Family Office Strategies
The aggressive tilt toward private credit and infrastructure shows no signs of slowing down. Ultra-wealthy investors, with their appetite for yield and long investment horizons, are prepared to weather the challenges of illiquidity and complexity. However, as more money chases these themes, those who bring real expertise, patience, and a willingness to hunt beyond the obvious will likely outperform.
The competitive landscape is intensifying, with asset managers, insurers, pension funds, and even sovereign wealth funds jostling alongside family offices for the best private credit opportunities and infrastructure pipelines. Family offices must stay ahead of the curve by identifying emerging trends, building strong relationships with investment managers, and maintaining a disciplined approach to risk management.
Conclusion: Navigating the Alternative Frontier
The strategic pivot by family offices toward private credit and infrastructure is more than a passing phase—it represents a bold reset in the investment landscape. These asset classes have earned their place at the top of alternative allocations, offering stable yield, inflation protection, and opportunities to ride structural megatrends. However, this evolution is not without its challenges, including excess competition, unfamiliar risks, and new operational demands.
For family offices seeking to safeguard and compound generational wealth, the key to success lies in looking beyond the headlines and surface trends. It requires getting hands-on with strategy and execution, understanding the underlying assets, and never underestimating the speed at which the next tide may roll in. As the world’s economic and technological engines shift gears, family offices’ bets on alternatives are fast becoming the new mainstream. Those who navigate this frontier with skill and foresight will be well-positioned to thrive in the years ahead.
