Orlando Bravo Warns of Risks for Retail Investors in Private Equity Vehicles

Orlando Bravo, co-founder of private equity firm Thoma Bravo, has raised concerns about the increasing participation of retail investors in private equity continuation vehicles. These vehicles are funds established by private equity firms to acquire portfolio companies they cannot sell or wish to retain longer. Bravo warns that affluent individuals may inadvertently provide liquidity to firms seeking to offload underperforming assets, particularly amid stagnating sales of investments made during the pandemic's low-interest rate period.

Traditionally, private equity investments have been the domain of institutional investors due to their complexity and risk profile. However, the landscape is shifting as private equity firms increasingly turn to retail investors through "evergreen" funds—investment vehicles that accept continuous contributions and withdrawals. While these funds offer liquidity, they may carry higher risks. Bravo expressed concern that retail investors might not fully understand these risks, stating, "The retail investors might not be as sophisticated. There might be more risk of them not understanding what they're involved in, and this could create all sorts of problems."

This trend is occurring against a backdrop of significant shifts in global investment strategies. Canadian pension funds, such as the Caisse de dépôt et placement du Québec (CDPQ) and the Canada Pension Plan Investment Board (CPPIB), are reassessing their heavy U.S. exposure in favor of increased investments in the UK and Europe. CDPQ, managing C$473 billion for six million savers, plans to invest over £8 billion in the UK over the next five years. CDPQ CEO Charles Emond expressed strong confidence in the UK's transparency and investment environment, adding that the UK is a top priority due to its clarity and willingness to collaborate.

Similarly, the Healthcare of Ontario Pension Plan (HOOPP), managing $113 billion, aims to boost returns by increasing investments in UK and European real estate, infrastructure, and private equity. HOOPP's new London office, its first overseas venture, will serve as a platform to expand in Europe. Despite delivering a 9.4% return in 2023, HOOPP intends to achieve returns 4 to 5 percentage points above risk-free rates in the long term.

These strategic shifts reflect a broader trend among institutional investors seeking to diversify their portfolios amid concerns over U.S. economic stability. European and Asian investors are increasingly turning to global equity funds that exclude U.S. assets. Between December 2024 and April 2025, investors allocated $2.5 billion into such funds, marking a reversal from years of outflows. This trend is driven by apprehensions regarding U.S. economic stability following Donald Trump's re-election and proposed tariffs. Kenneth Lamont, principal of research at Morningstar, noted, "There is a question mark about the U.S.'s role in the global economy, and we have seen a reversal in flows... There are many investors who are questioning the U.S.'s prime position within global markets as an investment destination."

The increasing participation of retail investors in private equity continuation vehicles may expose affluent individuals to higher risks, particularly if they lack the sophistication to fully understand these complex investments. The influx of retail capital provides an alternative liquidity source for private equity firms but raises concerns about the suitability and risk awareness of these investors. Furthermore, the shift of major institutional investors away from U.S. assets towards European markets could influence global capital flows and impact the valuation and performance of U.S. markets.

As the investment landscape continues to evolve, both retail and institutional investors must remain vigilant and informed about the risks and opportunities presented by these changes.