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INSTITUTIONAL INVESTING & PRIVATE MARKETS

Institutional Investing and Private Markets

LONG-TERM CAPITAL REQUIRES ALLOCATION DISCIPLINE.

Institutional investing requires combining return, risk, liquidity, governance, and time horizon within a coherent decision-making process. In private markets, this discipline assumes particular relevance because manager selection, asset quality, investment structure, and relationship building produce effects destined to unfold over time.

A perspective of Marco Mizzau, developed partly through his experience as General Manager of Inarcassa, and today integrated into his strategic advisory for private capital, investors, and companies.

LONG-TERM CAPITAL

Investing means allocating capital over time.

An institutional investor never evaluates an investment in isolation.

The decision sits within a wider architecture that must constantly balance liabilities, expected returns, risk, liquidity, diversification, time horizon, governance, and implementation capacity.

For pension institutions in particular, the investment function is structurally connected to long-term obligations and a deep intergenerational responsibility.

INSTITUTIONAL EXPERIENCE

A perspective built from inside an institutional investor.

INARCASSA
Former General Manager
2019–2023

The general management of a leading pension institution exposes one to the complexity of institutional governance, long-term planning, and investment processes.

This experience allowed direct observation of the asset allocation context, private markets dynamics, and relations with asset managers and institutional counterparties, integrating ESG considerations and real-economy investment themes within the framework of fiduciary constraints.

MARKET CONTEXT
SECTOR CONTEXT · COVIP 2024 DATA
€125.1BN
PENSION FUND SECTOR ASSETS
End 2024 · COVIP
€16.95BN
INARCASSA ASSETS
End 2024 · COVIP
13.5%
SHARE OF SECTOR ASSETS
Inarcassa · End 2024 · COVIP

End-2024 context data, after Marco Mizzau left his Inarcassa role in June 2023. These figures are neither assets managed by Marco nor results attributable to him.

Private markets are not merely an investment category. They are an allocation decision that must be coherent with objectives, time horizon, liquidity, governance, and selection capability.

STRATEGIC QUESTIONS

HOW DOES AN INSTITUTIONAL INVESTOR APPROACH CAPITAL ALLOCATION?

Allocation always starts from the institution's liabilities and objectives, well before the selection of individual products or managers.

An institutional investor defines its portfolio architecture based on the duration of its obligations, risk tolerance, and liquidity requirements.

Only after establishing this fiduciary perimeter does it proceed to build the asset allocation and evaluate strategies and managers consistent with its mandate.

WHAT ROLE CAN PRIVATE MARKETS PLAY IN A LONG-TERM PORTFOLIO?

Private markets offer access to real assets, infrastructure, and private credit, requiring in return the assumption of an illiquidity premium.

For capital with a long duration, these markets allow diversification of risk and return sources compared to listed markets.

However, their inclusion in a portfolio requires rigorous liquidity management and a deep understanding of the temporal structure of the investments.

HOW IS A MANAGER EVALUATED BEYOND HISTORICAL PERFORMANCE?

Past performance is an outcome; selection evaluates the repeatability of the process that generated it.

An institutional investor analyses investment philosophy, team stability, governance solidity, and risk management discipline.

Crucial elements also include alignment of interests, reporting quality, and consistency in portfolio construction.

WHY DO GOVERNANCE AND INVESTMENT PROCESS MATTER?

Solid governance ensures decisions are made with accountability, mitigating conflicts of interest and preserving discipline over time.

The clear allocation of decision rights, the quality of information brought to investment committees, and continuous monitoring are the elements that transform a theoretical strategy into practical execution.

HOW DOES ALLOCATION IN PRIVATE MARKETS CHANGE OVER TIME?

Illiquid allocation requires dynamic planning of commitments (commitment pacing), capital calls, and distributions.

Portfolio construction must balance vintage diversification, manager concentration, and long-term monitoring.

It is not static stock-picking, but a continuous flow of temporal decisions.

WHAT MAKES THE RELATIONSHIP BETWEEN AN ASSET MANAGER AND AN INSTITUTIONAL INVESTOR CREDIBLE?

Institutional relationships are built on transparency, alignment, and the ability to maintain continuous dialogue on risk, not just on fundraising narratives.

A solid relationship requires clarity in the investment thesis, consistency in strategy, and team stability.

The manager must be able to explain not just performance, but also portfolio construction and risk management choices, maintaining coherence throughout the investment's lifecycle.

INSTITUTIONAL ALLOCATION

The decision before the investment.

01 — OBJECTIVES

Objectives and function of capital.

02 — TIME HORIZON

Duration of liabilities and investment.

03 — RISK

Risk capacity and tolerance.

04 — LIQUIDITY

Liquidity requirements and committed capital.

05 — DIVERSIFICATION

Sources of risk and return.

06 — GOVERNANCE

Decision-making processes and accountability.

07 — MANAGER SELECTION

Manager quality, consistency, and execution capability.

08 — MONITORING

Reporting, risk management, and verification over time.

PRIVATE MARKETS

Patient capital. Disciplined selection.

Private markets represent a heterogeneous universe that can include private equity, private debt, infrastructure, real assets, and venture capital.

The inclusion of these asset classes depends strictly on the institutional mandate and the overall portfolio architecture. There is no obligation for an investor to allocate to every category, but rather the need to select with discipline the instruments most suited to their risk and return profile.

CAPITAL & REAL ECONOMY

From institutional savings to the real economy.

One of the structural questions for Italian capital markets is how long-term savings can participate efficiently in the financing of companies, infrastructure, and productive investment while preserving the fiduciary, risk, and return objectives of institutional investors.

CONSOB reports a 2025 market-funding ratio of 34% in Italy, compared with a 37% EU average; at end-June 2025, Italian households held €6.148 trillion in financial assets. These figures frame the long-term-capital question without implying that every investor should allocate to private markets.

ACCESS TO INSTITUTIONAL CAPITAL

Raising institutional capital means understanding who allocates it.

Institutional capital does not constitute a homogeneous market.

Pension institutions, pension funds, foundations, insurance companies, and other professional investors operate with different objectives, constraints, governance, time horizons, and decision-making processes.

For an asset manager or a private markets GP, building a credible relationship with these investors therefore requires more than product quality or historical performance: it is necessary to understand the allocator's mandate, asset allocation, selection process, governance, reporting requirements, and decision-making logic.

BEFORE PRESENTING A FUND TO AN INSTITUTIONAL INVESTOR, ONE MUST UNDERSTAND HOW THAT INVESTOR DECIDES.

PENSION INSTITUTIONS (CASSE PREVIDENZIALI)

Their social-security function imposes a long-term horizon, with an asset allocation strictly bound by actuarial balances and structured decision-making processes.

PENSION FUNDS

Negotiated funds, pre-existing funds, open funds, and individual pension plans (PIPs) are distinct in legal basis, governance, and enrolment model; they are not an interchangeable allocator class.

BANKING ORIGIN FOUNDATIONS

Characterised by the dual objective of capital preservation and local resource disbursement, they present specific risk profiles and illiquidity tolerance.

INSURANCE COMPANIES

Investment is strictly driven by the nature of insurance liabilities, capital requirements, and the Solvency regime.

OTHER INSTITUTIONAL AND PROFESSIONAL INVESTORS

Other professional bodies may have different mandates and selection logics. Supplementary healthcare funds and entities have healthcare-assistance purposes: registry status does not in itself qualify them as private-markets allocators.

HOW SHOULD A MANAGER PREPARE WHEN SEEKING DIALOGUE WITH INSTITUTIONAL INVESTORS?

Access to institutional capital first requires coherence between the manager's strategy and the investor's characteristics.

The evaluation is not only about return and track record, but also team stability, governance, investment process, risk management, portfolio construction, reporting, alignment of interests, and the ability to sustain transparent institutional dialogue over time.

Preparation precedes contact: it is necessary to understand which investors are coherent with the fund's strategy, asset class, duration, size, and profile, building a proposition that is readable from the allocator's perspective.

INSTITUTIONAL INVESTOR READINESS

Before access, preparation.

01 — STRATEGY

Is the strategy clear, coherent, and sufficiently differentiated?

02 — TRACK RECORD

Are the results readable, attributable, and presented in the correct context?

03 — TEAM

Does the team present stability, complementarity, and execution capability consistent with the strategy?

04 — GOVERNANCE

Are decision-making processes, responsibilities, and controls appropriately structured?

05 — PORTFOLIO & RISK

Are portfolio construction and risk management understandable and coherent with the strategy?

06 — ALIGNMENT

Is the incentive structure and alignment of interests comprehensible to the investor?

07 — REPORTING

Are information, transparency, and reporting adequate to sustain an institutional relationship?

08 — INSTITUTIONAL FIT

Is the strategy truly coherent with the allocator's mandate, asset allocation, size, time horizon, and constraints?

NOT ALL INSTITUTIONAL INVESTORS ARE SUITED TO EVERY STRATEGY.
THE QUALITY OF ACCESS ALSO DEPENDS ON THE QUALITY OF THE FIT.
FROM INSTITUTIONAL CAPITAL TO PRIVATE CAPITAL

Understanding both sides of capital.

The experience gained within an institutional investor offers a complementary perspective to current advisory activities for private capital operators.

Understanding how an institutional investor evaluates governance, strategy, team, risk, and execution capacity helps to read with greater depth the relationship between managers, investors, and companies.

ALLOCATOR SIDE
What must the institutional investor understand before allocating?
INSTITUTIONAL INVESTOR
↓
ALLOCATION
↓
MANAGER / STRATEGY SELECTION
↓
PRIVATE MARKETS
MANAGER SIDE
What must the manager clarify before seeking institutional dialogue?
PRIVATE MARKETS MANAGER
↓
INSTITUTIONAL READINESS
↓
INVESTOR FIT
↓
INSTITUTIONAL DIALOGUE
↓
QUALITY OF THE INVESTMENT RELATIONSHIP.
INSTITUTIONAL PERSPECTIVE

What institutional capital observes.

Institutional capital rigorously examines the fundamentals of asset managers. Elements such as clarity of strategy, quality of track record, team stability, internal governance, and institutional infrastructure are essential preconditions.

The ability to deploy capital consistently, portfolio construction, alignment, reporting, and risk-management discipline complete the assessment.

From the institutional investor's perspective to value creation in companies.

INSTITUTIONAL SOURCES
AUTHOR

Marco Mizzau

EXECUTIVE · CHAIRMAN · STRATEGIC ADVISOR

Former General Manager of Inarcassa, today he integrates his experience in governance and institutional allocation into strategic advisory for private capital funds, investors, and companies undergoing transformation.

PROFILE →

General strategic analysis content. Does not constitute investment advice, financial recommendation, placement activity, or investment solicitation.