Industry Trends
The rise of private credit in fintech lending
In 2024, fintech founders faced a severe venture-capital drought, but within 18 months, private credit funds began offering large term sheets, creating a US$280 billion opportunity for fintech loans over the next five years. Private credit has grown nearly ten-fold since 2010 to US$1.5 trillion AUM in 2024, with expectations to reach US$3.5 trillion by 2028. Fundraising momentum remains strong, with US$209 billion of final closes in 2024. Basel III Endgame rules could raise large-bank risk-weighted assets by 20%, prompting banks to partner with private credit funds to originate and distribute loans off balance sheet. Private credit exuberance has compressed untrenched pricing, making it an attractive asset class despite typical clauses like first-loss strips and performance triggers. SoFi’s Q1 2025 filings show consumer credit performing well, but macroeconomic risks like rising household credit card delinquency and mortgage arrears loom. Concerns about “leverage on leverage” and opaque funding chains persist, with regulatory transparency postponed to October 2025. The venture capital model is shifting, with more mid-sized exits to asset managers and insurers. Private credit funds are exploring growth markets in Asia and Latin America, leveraging dollar funding with local-currency wallets. Risks include credit deterioration, funding squeezes, regulatory shocks, and FX blow-ups. Facilities that price in volatility from day one is likely to endure. Key signals to watch include spread compression pace, reg-tech build-out, private fund reporting deadlines, Basel endgame rules, and structured-credit revival. Private credit, now a parallel banking system, could unlock cheaper credit for consumers and SMBs if deployed responsibly.
Source: Forbes
The rise of Asia pacific real estate private credit
APAC’s real estate private credit is emerging as a key growth segment, driven by rapid urbanisation, refinancing needs, and evolving capital requirements. Fundraising has accelerated, with demand for non-bank capital rising due to a funding gap from refinancing low-cost debt and selective bank lending. Despite challenges like market fragmentation and regulatory complexity, these barriers create opportunities for experienced managers to achieve high risk-adjusted returns. APAC, the world’s largest credit market valued at US$63 trillion, sees nearly 80% of credit extended through traditional banking, creating inefficiencies and limiting flexible capital access. Historically associated with distressed debt, APAC’s private credit market is now evolving, presenting solutions to capital inefficiencies as traditional lenders retreat. Private credit accounts for only 6% of RE financing in APAC, compared to higher levels in the US and Europe, indicating significant growth potential. Performing private credit strategies offer returns ranging from 8-15% for core-plus or value-add deals. Institutional investors are increasingly valuing private credit’s diversification benefits amid rising correlations between equity and bond markets. Markets like Australia and Singapore are attractive for RE private credit due to strong rule of law, transparent credit frameworks, and well-established lender protections. Success in APAC RE private credit hinges on partnering with experienced managers with deep local expertise. Investors should act decisively to deploy capital now to negotiate favourable terms and lock in outsized spreads. CLI is expanding its private credit strategies, leveraging its knowledge of Asia and investment expertise to drive high-quality returns for investors.
Source: CapitaLand
Continuation investments: A new era in private equity
The continuation investment market is projected to grow significantly, quadrupling from $70 billion to over $300 billion in the next decade, becoming a key driver of value creation and liquidity in private equity. This growth is largely structural, with over 80% of the 2024 transaction volume driven by long-term market evolution rather than cyclical effects. Continuation investments, which allow private equity managers to retain ownership and continue transforming portfolio companies without disruptive changes, are reshaping the private equity landscape. They offer cost-effective ways to drive company transformation, with management fees roughly half those of traditional buyouts, and provide more predictable returns and faster liquidity. The cyclical downturn in traditional exit routes has also increased the availability of continuation opportunities, contributing 17% to the 2024 transaction volume. The market expansion in 2024 saw continuation-related buyout and growth capital exit value reach $45 billion, representing 7% of distributions, with total transaction volume exceeding $70 billion. Continuation investments are displacing secondary buyouts, estimated to displace around 8% of total deal flow for mid and large buyouts over the next 10 years. Larger buyout and traditional secondary managers are launching dedicated continuation investment funds to fuel growth. The market's growth trajectory is expected to continue, with conservative projections forecasting a fourfold expansion by 2034. Even under conservative assumptions, the market is expected to triple, while optimistic scenarios predict a sixfold increase. This trend is driving further momentum in capital availability for continuation investments, providing additional tailwinds for transaction volumes in the coming years.
Source: Schroders
Market Sentiments
Navigating private equity: Performance metrics and market comparisons
The private equity sector has faced challenges in recent years due to elevated interest rates, macroeconomic uncertainty, and a muted exit market. Despite these hurdles, private equity continues to deliver superior returns compared to public markets over multi-year horizons. Reliable data providers like Cambridge Associates, MSCI, and Preqin, aggregate performance data from thousands of private funds to construct benchmarks, which are calculated net of fees and carried interests. Analysts use Public Market Equivalent (PME) methodologies to compare private equity returns against public market indices like the S&P 500 or MSCI World. Recent reports from Hamilton Lane, Bain & Company, MSCI, and Cambridge Associates reaffirm private equity's long-term outperformance. However, investors should be aware of the limitations of PME and other benchmarks, such as differences in sector exposure and the concentration of public indices. Success in private equity depends on selecting the right managers, as the dispersion of returns between top and bottom performers is vast. Top-tier managers generate alpha through sector expertise, operational improvements, and EBITDA growth.
Source: Moonfare
Market opportunity/challenges
Real estate private equity: Hidden red flags that kill promising deals
Real estate private equity investments often come with hidden pitfalls that can derail promising deals. Experienced investors recognize warning signs such as misaligned incentives, unrealistic exit assumptions, and operational weaknesses. Fund structures can create problematic incentives during downturns, and mechanisms allowing general partners to lock in profits early can leave limited partners with difficult choices. The SEC considers offerings "blind pool" when a significant portion of proceeds are not allocated to identified uses, adding risk. Timing issues in capital deployment, such as delayed capital calls and dry powder risk, are critical warning signs. The accumulation of uncalled capital commitments pressures firms to invest hastily in suboptimal ventures. Geographic and sector misallocations can lead to value destruction, with emerging markets offering diversification benefits but also hazards. Overexposure to niche sectors without expertise can result in operational failures. In-house management offers advantages over outsourced property management, which often prioritizes minimizing burdens over maximizing returns. Tenant retention planning is crucial, as turnover represents a significant expense. Misjudging market liquidity at exit can create severe cash flow pressures. Investors must develop comprehensive due diligence frameworks to evaluate these pitfalls, including alignment between partners, realistic capital deployment timeframes, and exit strategies accounting for market corrections. Recognizing these warning signs allows investors to avoid capital-destroying deals and identify genuinely promising opportunities.
Source: Primior
The alpha advantage in PE carve-out deals
Private equity investors are increasingly engaging in carve-out transactions, where a segment, asset, or division is purchased from an existing company. These deals totalled $24 billion across 145 transactions in the first half of 2025, up from $19 billion across 127 deals in the same period in 2024. Carve-outs require the buyer to build a stand-alone company around the acquired asset within six to 18 months, presenting significant operational risks. To mitigate these risks, buyers and sellers should incorporate operational reviews into their negotiations. Five operational levers can help create value: structure, stand-up costs, agreements, working capital, and purchase price and economics.
Carve-out deals can be structured by purchasing the legal entity holding the asset or just the asset itself. Costs associated with divesting and establishing the new entity should be clearly communicated and agreed upon. Transition service agreements (TSAs) and long-term service agreements are crucial for defining post-deal services, with considerations for cost structure, duration, and enforcement. Working capital evaluation is essential to fund operating accounts and balance sheets, with a "working capital peg" benchmark ensuring smooth transitions. Purchase price and economics should reflect the long-term impact and near-term costs, with holistic approaches to valuation ensuring fair returns for both parties. Effective management of these elements is critical to avoid deteriorating returns before the deal is finalized.
Source: McKinsey & Company
CV-squared funds: A solution to private equity's deadline crunch
Serial procrastinators in private equity are facing challenges as buyout funds, which typically aim to buy, revamp, and sell companies within a few years, struggle with mergers and IPOs. To address this, the industry has turned to "continuation vehicles," allowing firms to hold onto assets longer while giving investors in mature funds a chance to cash out. However, these vehicles, which gained popularity in 2021 and usually have a three- to five-year lifecycle, are also aging. This has led to the creation of "CV-squared" funds, where assets are moved from one continuation vehicle to another. Examples include PAI Partners with ice cream maker Froneri and Accel-KKR with software firm Isolved.
CV-squared deals not only help avoid deadline crunches but also allow managers to retain promising assets. Investors may find comfort in the fact that the first round of continuation vehicles has performed well, with a median return of 1.4 times the original investment for vintages between 2018 and 2023, compared to 1.3 times for buyout funds. Continuation funds have advantages over traditional buyout funds, such as immediate investment and the potential to acquire assets at a discount in a buyers' market. However, there is a risk that these funds may hold onto assets past their prime, eventually needing to be sold at a discount in public markets.
The emergence of CV-squared funds highlights the increasing difficulty for private equity in navigating cycles and finding quick turnaround opportunities. This challenge is compounded by the industry's traditional structure of raising seven-to-10-year funds, making it harder to sustain. Innovations like CV-squared and "evergreen" retail funds indicate that extending deadlines is becoming a standard practice in private equity.
Source: Financial Times
Artificial Intelligence Scope/Trends
AI revolution: Transforming private market opportunities
The AI evolution is entering its third phase, termed "services as a software," where traditional business services like finance, HR, and customer support are delivered through AI-powered platforms. This phase represents a $3 trillion to $5 trillion opportunity, primarily accessible through private market assets. AI is transforming various sectors, including financial services, healthcare, and industrial operations, by automating complex tasks and improving efficiency. The rise of agentic AI, which refers to autonomous systems capable of reasoning and planning, is expected to reshape workflows in knowledge-based sectors such as legal, finance, and healthcare.
The U.S. is experiencing a reindustrialization wave, with significant capital expenditures in industrial automation and manufacturing construction. This trend creates opportunities for investments in automation, AI-enabled production, and digital infrastructure. Venture capital and growth equity managers are crucial in this space, helping companies scale and professionalize. AI is also compressing the time to profitability for companies, with median time to $10M revenue dropping from 10 years to just 12 months.
The venture and growth landscape are showing signs of revitalization, with AI-related private market dealmaking exceeding $140B in 2024. Despite capital scarcity, there is a measured yet meaningful capital deployment against clear paths to scale and liquidity. The integration of AI into businesses is expected to drive customer relationships, competitive advantages, and revenue growth. Investors are recommended to consider the suitability of these opportunities carefully and seek independent professional advice if needed.
Source: J.P. Morgan
The future of private markets: AI and digital transformation
The alternative investment landscape is rapidly evolving, driven by the pursuit of higher yields and diversification, with global alternatives AUM projected to reach $29.2 trillion by 2029. Despite this growth, many investors still manage these portfolios through fragmented systems, manual processes, and static data. The complexity of managing private market portfolios is compounded by the need for nonstandard documents and unstructured data, creating operational challenges. Asset owners are increasingly seeking advanced technology solutions to address these issues, with AI playing a crucial role in digitizing data and automating processes. A survey by BNY and Stanford’s Research Institute for Long-Term Investing revealed that significant barriers to increasing alternative investments include manual processes and challenges in extracting and normalizing data. Asset owners are looking for consolidated views of private market exposures alongside public market exposures to make more informed decisions. AI is being integrated into operations to support data extraction, portfolio monitoring, and performance analytics. However, the growth of AI introduces new risks around information accuracy and security. Building a solid foundation of clean and structured data is essential for maximizing the value of AI. The next generation of private markets technology, along with advances in AI, has the potential to transform alternatives investing, enabling dynamic management of portfolios and better risk management. Success depends on having the right tools and infrastructure to support real-time decision-making amidst growing complexity.
Source: BNY
Others
Driving forces behind alternative asset growth
Alternative assets are rapidly shedding their niche status, with assets under management projected to grow to US$30 trillion by 2030, driven by global investor demand for higher yields, diversification, and inflation-resilient income streams. Recent U.S. legislation now allows alternative investments within 401(k) retirement plans, unlocking vast pools of retirement capital for private equity, private credit, real estate, and other alternative assets. Four forces amplifying this growth include institutional rotation, retail democratization, regulatory velocity, and technology maturity. The expansion reshapes stakeholders, requiring management firms to streamline processes, enhance digital clarity, manage larger data volumes, and reinforce cyber safeguards. Persistent friction points include manual document handling, fragmented data, and rising disclosure expectations. Technology is now core infrastructure, with investments in cloud data fabrics, blockchain ledgers, automation, regulatory technology, and advanced integration architecture. Specialized platforms cater to different asset classes, and the scale playbook offers a roadmap for turning frictions into gains in speed, accuracy, and scalability. Talent demand in alternative assets leans on data engineers, AI specialists, and compliance technologists. Sourcing for alternative-asset services works best with integrated platform-and-operations bundles that scale without adding headcount. Implications for technology providers, service partners, and consulting firms include the need for native capabilities, modular design, interoperability, and visible controls. Looking forward to 2026, alternative assets are expected to continue growth momentum amid volatile markets and favourable regulations, with institutional interest strong in private equity, private credit, and real estate. Firms that standardize data, code compliance, explain AI, future-proof ledgers, and run elastic operations will meet market demands for speed and transparency.
Source: Everest Group
