Private Markets 2025

Selectivity, Scale and Shifting Currents

So far this year, private markets have been defined by selectivity, scale and shifting global currents. Activity has been robust yet uneven, with several sizeable closes as managers navigate geopolitical tensions, volatile equity markets and evolving investor preferences.

Mega-Managers Take the Lion’s Share

Reports from Preqin and PitchBook show private equity fundraising broadly matching 2024 levels, but with capital concentrating heavily into the hands of mega‑managers, as has been the case for a number of years. KKR’s latest buyout fund and EQT’s infrastructure vehicle are prime examples of successful closes, while smaller firms continue to wrestle with the same old longer fundraising cycles and more exacting LP requirements.

Private Credit’s Relentless Rise

A notable feature of the year has been the ongoing rise of private credit, which has now cemented itself as a core allocation. Direct lending platforms and specialist credit managers are reporting strong inflows, as borrowers seek flexible capital and investors hunt for higher yields in this environment. According to Preqin’s mid‑year data, private credit AUM is set to surpass $2.4 trillion globally, with insurance companies and family offices particularly active in the asset class. Spreads remain attractive, and managers with proven origination networks are finding plentiful deal flow even when traditional bank lending remains constrained.

Hedge Funds Post Mixed Returns

Hedge funds have posted mixed performances. Global indices rose around 4% through end July (HFRI), with some multi‑strategy funds delivering double‑digit gains. Equity managers are largely in positive territory, with healthcare the main detractor. Performance has at times been weighed down by heavy exposure to the US, which has occasionally lagged other regions, although managers traded opportunistically around President Trump’s various pronouncements, driving short‑term swings. In Macro, discretionary managers benefited from the weakening US dollar and increasingly volatile commodity prices, while many systematic strategies struggled to gain traction, whipsawed by Trump.

Technology and Energy Transition Lead Sector Trends

Sector trends within private equity have been equally telling. Technology and software remain front‑runners, driven by continued investment in AI, data analytics and cybersecurity. Energy transition themes are also drawing record allocations, with storage solutions, grid upgrades and clean‑tech platforms still seeing strong demand as governments (ex-US) and corporates press ahead with climate commitments. In contrast, consumer discretionary and traditional retail have proven challenging; subdued spending in Europe and Asia has slowed exits and compressed valuations, making these segments difficult hunting grounds.

Geopolitics Reshape Capital Flows

Geopolitical instability has remained a defining force in shaping capital flows throughout 2025. In Europe, energy security remains front of mind as the protracted war in Ukraine, coupled with renewed tensions in the Middle East and disruptions to key shipping routes in the Red Sea, has driven investors further toward infrastructure, logistics and defence‑linked assets. Across Asia, persistent concerns over Taiwan and the wider semiconductor supply chain have made investors more selective in advanced manufacturing and cross‑border joint ventures, with many favouring on‑shoring or “friend‑shoring” strategies. In the US, Trump's renewed focus on tariff escalation and a more protectionist trade stance has already prompted private equity sponsors and strategic buyers to slow or rethink certain cross‑border deals, building in wider risk premiums and channelling more capital toward domestic opportunities.

Scale, Clarity and Discipline Win the Day

As Blackstone’s leadership noted on a recent earnings call, “Investors are rewarding those with scale, thematic clarity and operational discipline.” That sentiment neatly captures the story of 2025 so far: private capital remains a powerful engine of opportunity, but success belongs to those able to align ambition with prudent positioning in an increasingly complex global landscape.

Sources: Preqin Q2 2025 Global Report; PitchBook H1 2025 Private Equity Trends; HFR Global Hedge Fund Index, July 2025; Bain & Company Mid‑Year Investor Brief, 2025.

Alastair Crabbe, Editor of The Alternative Investor & MD, Brodie Consulting Group