By: Laura Sankowich
Allvue Marketing Thought Leadership and PR
March 9, 2025
Private Equity Trends for 2025
2024 was a relatively laid-back year for private equity, despite it still managing to surpass 2023 in both deal value and count. The industry had to grapple with several challenges such as high interest rates, inflation, and geopolitical tensions, all of which tempered growth.
However, looking forward to 2025, experts are relatively optimistic about the sector. But what are some of the main trends, themes and developments that are set to define this sector in the year ahead? Here are the top 5.
1. Continued growth and maturation of private credit
Over the past decade, the private credit market has grown fourfold, cementing its position as one of the most dynamic sectors in private equity. In 2024, the sector hit a record US$3 trillion in assets under management (AuM)
Experts predict that this upward trajectory will persist through 2029. According to Preqin, AUM for Private debt is projected to reach an all-time high of $2.64 trillion by 2029, which is 1.76 times the 2023 figure of $1.50 trillion. Overall IRR expected to increase from 8.1% to 12.0%, with distressed debt averaging 13.4%. Total private debt AUM is expected to grow at a CAGR of 9.88% from the end of 2023 to 2029. (2017-2023 period, private debt AUM grew at a rate of 14.04%)
One key driver of private credit’s sustained growth is the regulatory tightening imposed on banks following the global financial crisis. Stricter regulations have limited banks’ ability to lend to lower-quality issuers, leaving a financing gap that private credit providers, including private equity firms, are uniquely positioned to fill.
Beyond that, the inherent advantages of private credit such as speed, flexibility, and tailored solutions continue to attract borrowers seeking alternatives to traditional financing.
The potential for growth in this sector is enormous. McKinsey & Company estimates that the addressable private credit market in the U.S. alone could exceed $30 trillion.
Recognizing this opportunity, major players in the private equity space are making bold moves to deepen their presence in private credit. For instance, BlackRock recently agreed to acquire HPS Investment Partners (a global credit investment manager) for approximately $12 billion. Such moves further signal that the industry anticipates continued growth and further maturation of private credit in the coming years.
2. Integration of AI into private equity operations
AI has unlocked new possibilities for business from a wide range of industries including healthcare, finance, logistics and many more. The PE world is slowly coming online as well as it navigates use cases, regulatory requirements, talent and budget alignment, and internal buy in.
In 2025, AI is expected to continue revolutionizing private equity (PE) operations, offering firms new ways to drive efficiency, improve decision-making, and enhance profitability.
For example, AI-driven tools allow private equity firms to analyze large volumes of data to identify potential investment opportunities more effectively. Traditional deal-sourcing methods often relied on personal networks and time-consuming processes. In contrast, AI can scan market trends, financial reports, news, and even social media to identify acquisition-ready companies faster and with greater precision.
AI also plays a crucial role in due diligence. Firms no longer have to spend weeks or months sifting through or analyzing documents such as financial statements, legal documents and contracts to determine if a particular investment opportunity is viable. AI automates this process. Furthermore, AI can help firms identify market trends and potential threats more accurately, which helps ensure PE firms make more informed investment decisions.
AI also helps in portfolio management. It allows private equity firms to track key performance indicators (KPIs) in real time, so they can quickly spot any underperforming assets. AI can also predict future trends, such as revenue growth or potential cost issues, based on historical data. This helps firms make smarter decisions and take action to improve performance or address problems before they become serious.
The influence of AI on private equity isn’t limited to internal operations, however. With its potential to revolutionize entire industries and create scalable, high-growth opportunities, AI-related investments will continue to be a dominant trend in private equity throughout 2025, continuing a trend that started in 2023.
More specifically, we can expect to see PE firms direct a significant amount of capital into AI-powered solutions across industries like healthcare, finance and logistics as well as the companies that provide the necessary hardware, software and other services like cloud computing that enable AI technologies to thrive.
3. Rise in secondary market transactions
The secondary market experienced a record-breaking year in 2024, with deal volume reaching an impressive $150 billion, surpassing the previous high of $130 billion set in 2021.
This momentum is projected to carry forward, with industry professionals anticipating sustained strong activity. In fact, some predict that the secondary market could hit $200 billion in 2025.
So, what’s behind this optimistic outlook? According to analysts, one key driver is the growing acceptance of secondaries as a proactive tool for managing funds, companies, and portfolio; rather than just a contingency measure.
For instance, GP-led secondary transactions, such as continuation funds, have gained significant traction as GPs aim to retain high-performing assets while providing liquidity to existing investors.
Another factor contributing to the positive outlook is the increasing alignment of buyer and seller expectations. In the past, pricing mismatches between these two parties were a major obstacle for secondary transactions. However, recent trends show that these dynamics are stabilizing, with both buyers and sellers having a clearer understanding of asset values and market conditions. As this alignment continues into 2025, it is expected to lead to more deal closures and smoother transactions across the secondary market.
Just as we saw with private credit, some firms are making strategic moves in anticipation of a highly active secondary market. A notable example is France-based private equity firm Ardian, which recently raised a $30 billion fund dedicated to acquiring stakes in aging private equity funds. This fund, the largest of its kind ever, signals a strong belief in the ongoing growth and importance of secondary market transactions.
4. Infrastructure investments opportunities
Infrastructure has been an attractive asset class for private equity investors for a long time due to its ability to deliver steady, long-term cash flows. In 2025, these assets are expected to continue being a key part of PE portfolios
The most active areas are expected to be digital infrastructure, energy and environment, and transport and logistics. Decarbonization and data centers represent a mega-trend in the industry – combining environment and digital infrastructure.
For example, in terms of energy, as the world shifts toward cleaner, more sustainable energy sources and as governments and corporations set ambitious targets for decarbonization, renewable energy projects (such as solar, wind, and other green energy solutions), will continue to attract significant capital from PE.
In regards to digital infrastructure, increasing reliance on digital connectivity is expected to fuel private equity interest in assets like data centers, fiber-optic networks, and 5G infrastructure.
As for transportation, some of the areas of interest for PE include airports, toll roads, and rail systems.
5. Expanded access for retail investors
Retail investors currently account for approximately 50% of global assets under management, yet they represent less than 20% of assets in alternative investments like private equity. This gap is expected to narrow in 2025, as the democratization of private equity accelerates, bringing more retail investors into the fold.
A major driver of this shift is the increasing development of products tailored specifically for retail investors by private equity firms and asset managers. These products often feature lower minimum commitments and periodic liquidity, making them more accessible to individuals with smaller capital pools.
Regulatory initiatives are also playing a pivotal role in expanding access to private. For instance, the U.S. Securities and Exchange Commission (SEC) has expanded the definition of “accredited investors,” opening the doors for a broader segment of individuals to participate in private markets.
This regulatory shift is complemented by advancements in technology, including the rise of user-friendly digital platforms like Allvue that make it easier for private equity firms to facilitate retail investors’ participation.
Collectively, these developments are expected to enable a significantly wider pool of individuals to participate in private equity in 2025, a sector that has historically been dominated by institutions and high-net-worth individuals.
Final thoughts: Top private equity trends for 2025
In summary, private credit, artificial intelligence, secondary transactions, infrastructure investments, and democratization of private equity are some of the main trends and themes that will shape the PE sector in 2025.
However, this is by no means an exhaustive list. The private equity industry is multifaceted, and numerous other trends and forces will undoubtedly have a big influence on the sector this year.
To thrive, private equity firms need more than just awareness of these trends and forces. They need tools that empower them to act decisively and strategically.
Allvue’s private equity software is designed to do just that, offering cutting-edge solutions for essential PE functions such as portfolio monitoring and management, investor relations management, fund accounting, business intelligence, compliance and many more.
With Allvue, you can confidently navigate emerging trends, unlock new opportunities, and achieve sustainable growth in 2025 and beyond.
Request a free demo of Allvue today to learn more.
Sources
AIMA. Private credit market surpasses US$3trn and maintains resilience despite growing stress. https://www.aima.org/article/press-release-private-credit-market-surpasses-us-3trn-and-maintains-resilience-despite-growing-stress.html
McKinsey & Company. The next era of private credit. https://www.mckinsey.com/industries/private-capital/our-insights/the-next-era-of-private-credit
BlackRock. BlackRock to Acquire HPS Investment Partners to Deliver Integrated Solutions Across Public and Private Markets. https://www.blackrock.com/corporate/newsroom/press-releases/article/corporate-one/press-releases/blackrock-agrees-to-acquire-HPS
Private Equity International. Secondaries volume to maintain strong pace on back of expected record year. https://www.privateequityinternational.com/secondaries-volume-to-maintain-strong-pace-on-back-of-expected-record-year/
Ardian. Ardian raises record $30 billion for world’s largest-ever secondaries platform. https://www.ardian.com/news-insights/press-releases/ardian-raises-record-30-billion-worlds-largest-ever-secondaries
Bain & Company. Why Private Equity Is Targeting Individual Investors. https://www.bain.com/insights/why-private-equity-is-targeting-individual-investors-global-private-equity-report-2023/
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More About The Author
Laura Sankowich
Allvue Marketing Thought Leadership and PR
An expert in digital strategy, content marketing, PR, and thought leadership, Laura brings more than 20 years of B2B marketing and communications experience to Allvue. Laura has extensive experience working for both publicly and privately held Fintech firms.
