Formue is the largest privately owned wealth management firm in the Nordics, overseeing and advising on a total of NOK 250 billion with 425 employees across offices in Norway, Sweden and Denmark. The firm provides institutional-grade investment solutions to high-net-worth individuals, with private markets forming part of its broader approach to tailored portfolio construction. Against the backdrop of the growing debate around illiquid investments, Christian Dahl, CEO of Formue, highlights that scrutiny is both healthy and necessary, but argues that the discussion misses the mark when private markets are portrayed as a problem in themselves.
A Central Part of Functioning Capital Markets
“The majority of value creation takes place in private markets,” says Dahl. To illustrate, he points to unlisted companies, family-owned businesses, real estate and growth capital as areas where value is created before a potential listing or entirely outside public markets. “When the world’s leading investors allocate capital to private markets over time, it is because they know where value is created,” Dahl explains.
“The majority of value creation takes place in private markets. When the world’s leading investors allocate capital to private markets over time, it is because they know where value is created.”
Christian Dahl, CEO of Formue.
Dahl links private markets to the broader functioning of capital markets. “Efficient capital markets must provide access to capital for more than companies listed on a stock exchange,” he notes. In that context, Dahl sees private markets as essential for entrepreneurs, growth companies and active ownership environments, and thereby for value creation, innovation and job creation. At the same time, he underlines that this does not make private investments suitable for everyone.
Illiquidity Is Neither Good nor Bad
The debate around private markets requires a more precise understanding of illiquidity, according to Dahl. “Illiquidity in itself is neither good nor bad,” he notes. For investors with the right time horizon, financial capacity and understanding of the risks involved, illiquidity can support long-term ownership and a less short-term-driven approach to capital allocation, Dahl explains. The key question is not whether an investment is illiquid, but whether the investor is able to hold it on the terms it requires.
“Illiquidity in itself is neither good nor bad. Private investments are not necessarily less volatile than listed investments.”
Christian Dahl, CEO of Formue.
The debate also requires a clear distinction between actual risk and the way private investments are valued and reported. “Private investments are not necessarily less volatile than listed investments,” Dahl says. He points out that the difference is often that private investments are reported less frequently, with valuations based more on underlying accounts and operational development than on short-term market sentiment. Mistaking this reporting pattern for lower risk would be misleading, but using it as an argument against private markets would be equally misleading, according to Dahl. “When illiquid investments become problematic, it is rarely about the markets themselves, but rather because of poor individual products or poor advice,” he explains.
Quality Defines Both Product and Advice
Dahl does not dismiss concerns around alternative investments and their potential disadvantages. “Some alternative investments are unnecessarily complex, have excessive fees, or are structured in ways that benefit the provider more than the investor,” he notes. Such products deserve scrutiny, as does advice that is driven more by distribution and its own incentives than by the client’s needs and situation, Dahl argues. This, he says, underscores the importance of an independent, competent and professional adviser.
“Some alternative investments are unnecessarily complex, have excessive fees, or are structured in ways that benefit the provider more than the investor.”
Christian Dahl, CEO of Formue.
At Formue, selectivity has defined its approach to private markets for more than two decades. The firm has focused on choosing managers carefully, structuring products with discipline and being clear about risks, costs and lock-up periods. “That often means saying no to products marketed as exclusive,” Dahl explains.
That selectivity also extends to the question of suitability. Formue works with clients ranging from households with significant wealth to some of the wealthiest families in the Nordics, as well as professional foundations and institutions. “Private equity is generally more suitable for our larger clients,” Dahl says, noting that these clients typically invest only part of their portfolios in alternative investments. At the same time, Formue has sought to make such solutions available to clients with smaller portfolios, provided the characteristics of the investment fit the client’s situation and preferences. Dahl emphasizes that such investments should always represent a smaller part of a broader portfolio that also includes liquid assets.
Private Markets Are Not the Problem
For Dahl, the point is not to shield private markets from criticism, but to direct criticism at the real issues. Framing private markets themselves as the problem risks shifting attention away from what matters most: the quality of the products, the incentives behind the advice, and respect for each client’s capital and time horizon.
“Private markets are not the problem. Used correctly, private markets are a necessary and value-creating part of an efficient capital market. Used incorrectly, they undermine trust.”
Christian Dahl, CEO of Formue.
“Private markets are not the problem,” Dahl says. “Used correctly, private markets are a necessary and value-creating part of an efficient capital market. Used incorrectly, they undermine trust,” he explains. His conclusion is clear: “The responsibility to know the difference lies with competent advisers.”
