A cocktail of global economic uncertainty, lingering inflation, geopolitical conflict, and spiraling government debt levels is creating a difficult operating environment for many private equity general partners. There are signs that the macroeconomic backdrop is improving, according to the With Intelligence Private Equity Outlook 2025, released today, but general partners need to be nimble and creative if they’re going to fight back the headwinds and outperform.
“Fundraising and dealmaking are incredibly tough right now. Many managers are having to tap new pools of capital to maintain asset growth while the secondaries industry has become a key provider of liquidity,” said Michael Rodwell, research lead, private equity, at With Intelligence. “Performance will be in the spotlight as we head into a transitional year that will offer many opportunities but also present a fair number of challenges.”
Highlights in the With Intelligence Private Equity Outlook 2025
Big Tailwinds… And Headwinds:
Overall, With Intelligence projects that private equity fundraising will rise in 2025 but remain below peak levels. Significant tailwinds that could drive notable improvement this year are the increasing size of private market opportunities, an easing exit environment, technological innovation (particularly around AI) and increased interest from new capital sources. Major headwinds include elevated interest rates, geopolitical and economic uncertainty, lingering fundraising challenges, and market saturation within the private equity space.
Private Wealth as an Alternative Funding Source
With many traditional pools of capital still overweight to private equity, private equity partners are increasingly seeking investment from private wealth channels across geographies. In 2024, With Intelligence tracked more than a dozen semi-liquid vehicles coming to market in the US alone. Eyes are now turning to how successful firms will be at scaling these products and getting traction with advisers and 401(k) providers.
Secondaries to Continue Unlocking Liquidity
Strong fundraising within the secondaries sector suggests that 2025 will be another big year for deal volume. Specialist secondaries products raised over $114 billion in fresh capital in 2024 with a further $120bn being targeted by funds in the market. With Intelligence believes the secondaries industry will continue to grow to fulfil surging demand.
Crowded Market to Experience Consolidation
With Intelligence forecasts further consolidation in the private equity industry, with larger traditional asset managers continuing to buy up private equity managers to seize new opportunities and broaden fee revenues. Elsewhere, underperforming managers, and those lacking clear succession plans, are likely to struggle to raise new capital, instead either opting to focus on current portfolios or being forced to wind down.
To access the full With Intelligence Private Equity Outlook 2025, please click here.
